Good afternoon. My name is Stephaney, and I will be your conference operator today. At this time, I would like to welcome everyone to The Hain Celestial Fourth Quarter Fiscal Year 2012 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will a question-and-answer session. (Operator Instructions) Thank you. I will now turn the conference over to Mary Anthes. Please go ahead.

Thank you, Stephaney. Good afternoon and thank you all for joining us today, and welcome to the review of our fourth quarter and fiscal year 2012 results. We are pleased to have several members of our management team here today to discuss our results, Irwin Simon, our Founder, President and Chief Executive Officer, Ira Lamel, Executive Vice President and Chief Financial Officer, John Carroll, Executive Vice President and Chief Executive Officer, Hain Celestial, U.S. and in person, Rob Burnett, Chief Executive Officer, Hain Daniels Group from the U.K. Our discussion today will include forward-looking statements which are current as of today's date. We do not undertake any obligation to update forward-looking statements either as a result of new information, future events, or otherwise. Our actual results may differ materially from those projected and some of the factors, which may cause results to differ are listed in our publicly filed documents, including our 2011 Form 10-K filed with the SEC. This conference call is being webcast and an archive of the webcast will be available on our website at www.hain-celestial.com under Investor Relations. Our call will be limited to approximately an hour so please limit yourself to one question with a follow-up question. If time allows, we will take additional questions and management will be available after the call for further discussion. Now, let me turn the call over to Irwin Simon, our Founder, President and Chief Executive Officer. Irwin?

Thank you, Mary, and good afternoon everybody. I hope you've had the opportunity to see the two releases that we released at 4 O'clock this afternoon. Well, first of all, it's our biggest year ever and it's our biggest net income and operating income year ever, and with great pleasure, I will take you through Q4 and our fiscal '12 numbers. Our sales for the quarter $350.7 million versus $286.8 million which is up 22.3%, not included in our numbers is $23 million of discontinued operations which were ICL and our sandwich business. In regard for our full year, $1,378,247 not included in that number is $74 million versus $1,217,207 a year ago, up 24.3%. Our gross margin in the quarter, if you take away our acquisition of Daniels and Europe's Best was basically flat and what a great accomplishment both, for the quarter and the year, 28.2 for the quarter and 28.8 versus 28.8 for the year considering all the input costs, considering our commodities and fuels and we were able to achieve a flat year-over-year on the quarters and year, excluding the lower acquisitions of gross margins which we talked about for the quarter, 26.6 versus 28.4 and actually for the year 27.8 versus 28.9. Our operating income, which you heard me say, our biggest ever or biggest income producing year. For the quarter, 36.2 versus 28.6, and that's 26.6% versus a year ago, and for the full year $144.9 million, I guess we can round that to $145 million versus $111.5 million versus year ago, up 30% on operating income, so some great accomplishments on our operating income and our gross margin. Our EBITDA for the quarter $45.6 million versus $35.5million, up 28.4% and our EBITDA for the year $179.1 million versus $141.9 million, up 26.2%, so…

Thanks, Irwin, and good afternoon, everyone. As we said in our press release, all of our full year and fourth quarter income and EPS numbers from continuing operations are the highest in the company's history. Net income from continuing operations in the fourth quarter this year was a fourth quarter record of $35.7 million, compared to $13.7 million in last year's quarter. Earnings per diluted share from continuing operations on a GAAP basis came in at $0.77 in this year's quarter, compared to $0.30 per diluted share in last year's quarter. Adjusted net income was $21.7 million, compared to $16.5 million, improving by 31.8%. Adjusted earnings were $0.47 per diluted share, compared to $0.36 per share in last year's quarter, improving by 30.6%. Our adjustments to net earnings consist of an earn out reduction of $15.5 million, offset by acquisition related expenses including integration and restructuring charges of $1.9 million and the loss from discontinued operations of $12.3 million. As mentioned in our press release, during the fourth quarter, we decided to dispose of our Daily Bread sandwich operations. Daily Bread, now classified as discontinued operation, generated a net operating loss in the quarter of $382,000 which was $0.01 per share. Other one-time charges associated with this pending disposal of Daily Bread, reduced earnings by a further $13 million, or $0.28 per diluted share. Along with the U.K. private label ready meals business which generated a net income of $1.1 million in the quarter, net earnings from all the discontinued operations reduced our earnings per diluted share by $0.26. Net sales from continuing operations in the fourth quarter were $350.8 million, an increase of 22.3% compared to $286.9 million last year. Foreign currencies negative impacted sales growth by $4.1 million. We saw a strong increase in sales across all of…

Thank you, Ira. Good afternoon. Q4 was a very strong quarter for Hain Celestial U.S., providing a great finish to FY'12. We had many highlights in the quarter. Starting with our Q4 Nielsen all outlets combined or AOC, consumption growth of 14% as Irwin previously mentioned. This reflects our accelerating consumption momentum in the grocery, mass and club channels. Our Q4 total consumption was 10%, which was one point higher than the last quarter's growth. Hain Celestial U.S. total consumption reflects the Nielsen AOC results combined with our high single-digit growth in the natural channel. Our 10% total growth was driven by gains across the portfolio, including 14 brands with double or high single-digit increases. Our Q4 sales were $242.6 million, up 5.3% versus year ago. The difference between our 10% total consumption growth and our 5% sales growth reflects lapping $5.2 million in year ago sales from discontinued low-margin club, private label and Martha Stewart SKUs and $4.2 million in the year ago distributor forward buys against last year's July 1 personal care price increase, which we did not repeat this year. Q4 U.S. sales growth, axe these two adjustments, was between 9% and 10%, in line with our 10% total consumption growth. Also in Q4, our gross profit margin was up 55 bps despite absorbing 4% in commodity and fuel-driven inflation. We were able to offset this inflation with productivity savings, dairy cost favorability and last year's price increase. Also, our Q4 SG&A as a percent of sales was down 65 bps reflecting the sales increase and the synergies realized from consolidating the Sensible Portion business into Melville. All this led to our Q4 operating income of $36.7 million, or 15.1% of sales which was up 14% and 120 basis points, respectively, versus year ago. We leveraged our…

Thanks, John. Good afternoon, everyone. Overall the U.K. had a solid fourth quarter with annualized like-for-like sales up almost 6% and 400% year-on-year for the effect of the Daniels and Cully & Sully acquisitions. Highlights in sales for the quarter included New Covent Garden Soup, up 20%, Linda McCartney frozen meat-free brand up 10% and prepared fruit up 13%. Our U.K. gross margin mix improved. Thanks to the higher soup sales and lower input cost from drinks in the period, and SG&A mix was also significantly lower than last year. The fourth quarter has seen significant progress on a number of strategic revenue synergies that commenced following the Daniels acquisition in late October. We have confirmed our frost listings with a major retailer for U.K. produced Greek Gods yoghurt, which we expect to commence in November this year. On preparation for the launch of Linda McCartney brand into chilled are at an advanced stage, and we received our frost listings from multiple retailers. This exciting project demonstrates the extended competencies of the Hain Daniels Group following the acquisition last year, as the products for this range will come from three different U.K. locations. Our New Covent Garden has launched successfully in the fourth quarter Fresh Bowls, which is in test at the moment in convenient stores and expected to be rolled out in the autumn, and this innovative product utilizes a soup site for the base product and our fresh innovation center in Luton to finish the product off. On a full year basis, sales were up 400%, of course, due to acquisitions of Daniels and Cully & Sully, but like-for-like sales were up almost 5% and Linda McCartney frozen meat-free was the star performer in our branded portfolio, up over 20%. The acquisitions also improved significantly the gross margins…

Operator, any questions?

(Operator Instructions) Your first question comes from the line of Greg Badishkanian with Citigroup.

Great. Thanks. Good quarter and congrats on the accretive acquisition.

Thanks, Greg.

Yes. I Just had two questions really. First is in terms of your sales growth, your consumption. Looks like consumption accelerated. What do you think drove it and are you seeing any big change in your current fiscal first quarter to-date, or is it pretty consistent?

Number one, Greg, I think as I said before, there are just more and more consumers buying more and more natural organic products. With distribution gains that we've been making, when you have more and more products available in more and more outlets it's what's driving the growth number, driving consumption I think I mentioned it. I got a Portland, Maine outside and I have been going there for five or seven years, and each year I got to visit a major mass market up there and this year I was there and I just couldn't believe the amount of products that we had in that store, so consumers' demand number one because you can get distribution and the consumer is not buying it, it's staying on the shelf, so consumer demand and increased distribution is a key to it. They say August lazy days of summer, we are not seeing the lazy days of summer.

Good. Then with respect to the acquisition, I believe it was $0.25 accretive for 2013. Would the run rate just be, if that's eight months, do we just kind of do the math to get to 12-month annual period or would 2014 be more accretive and what are you assuming to get to that $0.25 accretion in terms of whether it's sales, or margin improvement or any assumptions on that?

As we said around $0.25 accretive for 2013. Well, everyone's accurate. That does not include any synergies, integration costs that we'll have. We are spending, as you heard Rob say before these brands have been starved for marking dollars. Going into 2014, we think it will be additionally accretive as we expand distribution. There is no new products in 2013, we'll have a slew of new products, a slew of innovation coming right behind this, a lot of synergies and I think complementary to our current product line, so I don't think you can just take the $0.25 and add four more months to it and say that's what the numbers going to be for 2014.

Right. Great. Congrats again.

Thank you, Greg.

Your next question comes from the line of Scott Mushkin with Jefferies.

I have a couple of clarifications in the press release, it says $250 million of revenues, is that pound or is that dollars?

That's dollars, Scott.

That's dollars, because then the rest of it's in pounds, correct?

Well, we gave the acquisition cost in pounds because we don't know what currencies will do between now and closing, but the dollars, if we were to incorporate the full year, that's where it would have been.

Correct. Thank you, Ira. I think, Irwin, in your prepared remarks you talked about 6 to 6.5 EBITDA before synergies. Were you referring to this acquisition?

Yes.

Okay. That's good. I guess you guys went through a good rundown of where the brands stand in the U.K. number one here. A lot of number ones, I think, were rattled off. Why have has Premier Foods, this is not part of their kind of, I guess what they call their premier brands, so why have these brands been neglected? That's question number one. Then number two. If we think about Hain and its growth here in the U.S., Hain Celestial, it's been on the back of natural and organic. How do these brands fit into that kind of growth and how is natural and organic positioned in the U.K. in branded ambient grocery and where do you think that goes over time?

Number one, Premier Foods is going through a major de-leveraging of its balance sheet and it's been selling off assets and is focused on key categories. In discussions, this was a business they would love because it is, we would love to keep because it is profitable. There is growth and some significant brands, but they are ultimately key strategies in survival, so that why they've decided to sell it. From a standpoint as we looked at the U.K. and our overall Hain strategy is, how do we grow our business with 50% within the U.S. and 50% was outside the U.S. and we feel from our retailers, we feel from food, we feel from health that the U.K. is a market that we want to blueprint what Hain is in the U.S. and be the largest manufacturer of marketer of healthier foods. We feel we have that today with refrigerated with New Covent Garden, with Johnson's with our desserts, with our fresh fruit, with our Linda McCartney, to really get into the packaged goods side of the business. As we've tried, Scott, to take our products today, whether it was Terra Chips whether it was Dream and we have Rice Dream and Almond Dream in there and we do about GBP 6 million or GBP 7 million, we do sell a lot of Lima products through Whole Foods, but really to move into the Tescos and the Sainsbury's, we needed well known brands that were already in the U.K. If we could buy some brands that were over 100 years old, and really clean up these brands and take a lot of our entail that we really could create a good consumer packaged goods business. Now in the U.K. organic is not as important as the U.S., but clean…

Well, I think it gives us a proposition score and the U.K. has been the largest fruit and veg provider and there's quite a lot other products in the portfolio that are low calorie and there's quite a lot of sold NPD that did not had the money to invest to launch making the products more through one-a-day to five-a-day. They've just been starved of investment and we think we can unlock that and then add some value from our other businesses to create new category opportunities alongside the big brands of Hartley's. HARTLEY'S is a over GBP 40 million brand and it's something that's well respected by families and children and we think it's a great opportunity for a master brand in many different fruit and snack categories.

Scott, coming back, we got strong brands. We got a good size, we got good positioning in retailers. We have a tremendous amount of synergies with our existing business and that's why we sold our sandwich business, that's why we sold our ready-to-eat meals private label business. Today, 65% to 70% of our business will be branded business in the U.K. and if we want to go into the U.K. with what we have here, this was the way to do it, to buy some of the scale because there's no natural and organic foods over there of scale to really get into the U.K., and we think at 6, 6.5 times EBITDA real good value.

That was a fantastic explanation. I'm going to yield. I have so many more questions, but I know this call is going a long time, so I am just going to yield and maybe take some more offline. Thanks, guys. Really appreciate the [fairness].

Thank you.

Your next question comes from the line of Ed Aaron with RBC Capital Markets.

Hi, everybody and congratulations from me as well.

Thank you, Ed.

Just to kind of drill into the U.K. a little bit more. The $0.25 of accretion. Does that include the accretion that you were already planning on getting from the Daniels deal or is that incremental for those synergies?

That's incremental. The accretion from Daniels is included in our '13 guidance. The $0.25 accretion from this transaction is not.

Okay. Then, Ira, can you address the earn out reduction on Daniels, because it would seem to imply that maybe it hasn't kind of gone as well as might have been planned or accrued for upfront. Can you help me understand that?

Yes. It's not that it hasn't gone well. It's gone very well, but the earn out was based upon the plan that was presented to us by the seller sets. We of course put that up as a liability based on the accounting rules, but it was discounted on profitability and normal net present valued discounts. What's happened is there have just been some changes in the business that we've affected that the market has affected and we don't see going forward that there are really going to hit that earn-out, so we've evaluated it and we've taken that liability down. Now, of course we don't view it as part of core earnings. That's why we have adjusted earnings of $0.47 rather than including that and what we've tried to explain our operating income to-date.

Thank, and then just one last one. I guess maybe, kind of bigger picture question. Buying businesses at a multiple of half of where you are trading at, that's good for your shareholder as long as it's not to say quality business, but as I talked to some people about the story, one of the concerns that I sometimes I hear is, that maybe you kind of get what you paid for and there are some pushback about whether the quality of the assets that you are maybe buying in U.K., is it good as what people have come to expect from good natural and organic asset in the U.S? Irwin I was just kind of hoping if you could kind of maybe address that just at a high level? Thanks.

From a standpoint, Ed, going back you get what you pay for. On the other hand at the same time, when you overpay, you get what you pay for too. Okay? I come back and I think from a Daniels standpoint, where we are today at that time we probably paid about nine times with synergies in growth today. It's down to about seven times and we think there's a lot more value there. At the same time buying at 6.5, it is strong brands and I come back and say this here, Ed, brands, brands, brands, brands and they are not going away. They are brands that I think that really need some spending, some focus and their brands where there core is fruit and veg, which is the base of our business. If we really want to get into the U.K., we got to buy great brands. To go into the U.K. and start from scratch, and we saw that with our sandwich business where we went in there with private brand, we had a brand, we had a lot of competition in that area, we weren't one or two and we got our heads in hand in someplace, but here we have a good team on the ground. Today, we're a major player and I think we brought an asset at great value and great categories, and it's not like we brought a brand where if something happened with Hartley's that's your only egg in the basket. Again, Ed, we have proved it here. We bought MaraNatha, and we've almost triple that business okay? The honey business is a big part of the U.K. consumers' habit, so our jams and jellies, which are a big opportunity for kids product, so I think it's taking brands, taking our innovation, taking our health and wellness strategy and capitalize upon it. If we were here just to buy for the sake of buying it, that's one thing, but if we are here to buy it, modernize it and help take our old U.K. business to a whole new level, I think that's where that's unique and exciting for us.

Thanks. I'll pass it on. Thank you.

Thank you.

Your next question comes from the line of Andrew Wolf with BB&T Capital Markets.

Good afternoon and congratulations on certainly ending the year with a bang. Onto the Hartley's brand, sort of to piggyback on what last couple of guys were talking about. I was thinking as I was waiting to ask you some questions, what brands in Hain's portfolio maybe needed kind of a repositioning? One that came to mind for me was Health Valley with some better ingredients, freshened up the packaging and other things. Is that a good kind of analogy to what you think? I think Rob was talking about Hartley's, more fruit and that kind of thing sort of an ingredient upgrade, and is it also marketing upgrade, packaging or is really a repositioning if you are going to extract greater value with Hartley's and get consumption and velocity up?

I think it's a number of these things. Hartley's itself is $95 million brand, so it's a very, very scaled brand at present, but it really had investment and when we say no investment, we mean $0 for over five years, and still maintain number one position in jams and fruit and jellies.

Rob, sorry to cut you off. Does that mean brand innovation investment or certainly doesn't mean marketing dollar. They got a market behind it right?

It means marketing dollars zero.

Okay.

This business has done extraordinarily well over the last few years, but of course the overall group has not, so it's taking those businesses that have been very much cash-driven. Thinking of large percent are not reinvested in some business, so it's almost $100 million. Hartley's on its own. It's had no marketing dollars, zero marketing dollars and it still got a phenomenal brand equity. We done quite a lot of due diligence as you can imagine into the brand equity and it's very, very strong, particularly when young families, children and even 65 pluses. We think there is a lot we can do on the base businesses by communicating the benefits of the brand. It's called the best of British. It's been in Britain. It's been a brand leader in Britain for over 100 years, but it's got a long, long way to go and stretch. It has still have got, as I mentioned on the pipeline products that can be more one of your five a day, two of your five a day that got some very strong low calorie products that have been supported by dieting groups in the U.K. and they have got quite a lot of innovation in the jam category. They have really haven't had the money to do, so it's a whole mixture of things, branch stretch, investing in the base brand, getting people to understand the categories more, investing in the categories and having a dedicated resource team which this business has now had for a number of years now.

I think the entail that we have in new products from the U.S. that we can take to U.K. and market under the Hartley's brand where we had to go market under Health Valley create a brand from scratch, the dollars that we would have to spend and the time would be very, very difficult and very costly. By the way, you mentioned Health Valley. Health Valley this year with repositioning, repackaging is up 36% for the quarter, and the same with Garden of Eatin', up 26% for the quarter with the new packaging and new products, so new packaging, repositioning and spending on it is very important and we have a full plan for that.

Okay. That's really helpful. The other part of the U.K. question I'd like to ask is, I think you mentioned Greek Gods is going to gain distribution being produced over there. Just a sense of how broadly that distribution is going to be. Is it into the mass market? The Tescos and alike? Then, I think Earth's Best and MaraNatha specifically you mentioned and maybe another brand, are those very likely or is that more hypothetical what make sense to piggyback on the Hartley's acquisition?

Well, first with Greek Gods. We chose Greek Gods as our first venture with U.S. brands because it obviously is doing fantastically well here in the U.S. and Canada, but it's also was a refrigerated brand, which was our core area of operation, and what we've done is, we've taken the Hain model, we've not invested in assets. We've got a fantastic co-packer and we're going to launch with our largest customer in the U.K. later in the fall and give them a three, four-month exclusivity, look at how it's doing and then get ready for full national launch in the spring but that trial and our biggest customer will still cover our 15% to 20% of the U.K. population, so this is a significant trial across all their stores.

Is Greek yogurt, a hot category in the U.K. like it is here?

It is. The yogurt category overall in the U.K. is very, very large. It's very well established and Greek is the highest growth area.

Andy in regards to Earth's Best and MaraNatha, we have tried to launch them in the U.K. as a standalone and there's many baby products there today. We have thought about co-branding it, Earth's Best, Hartley's or MaraNatha Sun-Pat with our nut butters and that would be a way to get into the U.K., of that market or just take our cashew almond butters and expand it, because right now it's only peanut butter they sell. They don't sell any almond butters, cashew butters or anything else. We saw the explosion of pouches here in the U.S. and putting Hartley's into a kid's product with a pouch which is fruit, we think there's tremendous opportunity there and whether we call it Earth's Best, Hartley's, we are not sure yet but that's things we are going to look at.

Great. Just one last question coming back to the U.S. It's pretty high level, but I think it's fairly topical. You mentioned 98% of Hain's product is GMO-free, and assuming a 100% everywhere but the U.S., it's still a pretty high number in the U.S. over 95% I think. California's proposition 37, from the ballot and some polls I read suggest it's probably going to pass or could pass. What is, and I know the Grocery Manufacturers Association of Americas have strongly opposed to that, so I just want to ask you a business question and a political question. Business-wise with your strong GMO positioning, I mean, what does that mean for the (Inaudible)? Is that a major competitive advantage for Hain in that marketplace? Just from a cost perspective, how do you view this? Purely business-wise hypothetically, if the proposition passes?

Andy, the thing is Hain Celestial has published and we've supported GMOs and early on and no GMO sorry. It's been a long couple of days. In essence, if it passes, it's what we've been saying all along and I think there will be a lot of fall-out across the rest of the U.S. I think as there are some changes to the proposition that will have to happen, but we didn't believe in it. We wouldn't have 98% of our products today that are GMO-free.

Okay. That's great. I'll also pass it on and congratulations, again on such a credible year.

Thank you.

You're welcome.

Your next question comes from the line of Bill Chappell with SunTrust.

Hi, everybody. This is Sarah Miller on for Bill. I guess, Ira, question for you is you talked about when you ran through some of the financials what the balance sheet looks like at the end of the quarter and at the end of the fiscal year, but I am just wondering with the disclosure of the other sale and now this acquisition, what the is the shape of the balance sheet after the transactions and what's your capacity and your appetite for more deal, so could you kind of give us a little bit more color around that?

Sure. The balance sheet that's included in the press release identifies the assets held-for-sale, so you can look at that balance sheet without those assets and make the appropriate assumption that's what we look like, so the assets aren't very significant on those businesses and we will be just as strong without them on the balance sheet. Actually stronger than with them. As far as our leverage is concerned and our capacity for greater acquisitions, we're only leveraged at about 2, 2.1 right now under our credit facility and we have the capacity to continue to fund acquisitions and there is a very heavy taste in the credit market for Hain to move its credit facility availability to higher levels, so we're being chased on that. Lots of room for more deals.

Then I guess follow-up question on that. What is the M&A market looking like now? Are you still going to focus on the U.K. or now that this deal is done, what the environment look like and what kind of stuff are you looking into?

You know, you heard what I said when I was going through my presentation. Last year in 2012, John and his team with $81 million of new distribution contributed $20 million of EBITDA, and that that did cost something, but it's not like we had to go and pay to 8, 9, 10 times, so number one, our appetite is to grow our business organically, gain new distribution, but if there’s good, smart, strategic, acquisitions out there, we're going to buy it. Like Ed Aaron said before, if you're trading at 9, 10, times EBITDA, and you can buy 5, 6 times. Unfortunately, we got a lot of brands that we can turn into bunnies and we can turn in to rabbits within ourselves to go out and pay those kind of multiples, so we're not going to go out and pay the crazy multiples. We'd rather go out and buy great assets, great brands like we get from Premier at 6, 6.5 times and really put our marketing innovation, our distribution cloud and take them to a whole other level and we are going to look at acquisitions abroad, U.K. We are going to look at acquisitions maybe in Australia, Asia, but the U.S. for us where our major market is. We think we did a great acquisition in Canada with Europe's Best, so we are definitely going to be opportunistic. As Ira said, we got the balance sheet to grow there and do it. On the other hand, if we don't do another acquisition this year, we are in great shape.

Okay. Great. Thanks so much guys and congratulations.

Thank you.

We have time for just a few more questions. Your next question comes from the line of Andrew Lazar with Barclays.

Good afternoon, everybody. Just two things. First would be on the core business and the guidance axe the most recently announced acquisition of 210 to 220. That is quite a bit higher than I guess where the kind of consensus for fiscal '13 had stood and so I'm just trying to get a sense of where maybe, we on the street might have potentially been too conservative if you come in at the high end of that range or what you are seeing that gives you that level of visibility? Is it the sales piece was roughly in line with where we had it modeled? My sense is it's more on the cost side, so maybe it's your visibility into where your input costs were locked in for part of the year, perhaps you can address that first?

Andrew, let's come back for a second. I think, again, number one everything disseminates from sales. Okay? We think we feel good about our organic growth, we feel good about the consumer continuously buying healthier natural organic products. You heard what John took you through in regards to operation wide space and his growth with his retailers. At the same time, we feel good about that in Canada and we really feel good that we can develop new products like we have done in the past. Now that we'll have a full year of the U.K. Daniels, we will not have our sandwich business to focus on and we feel there is tremendous growth opportunities with Linda McCartney fresh, our yogurt business. We've had some challenges last year in Europe with Danival. We think we got a lot of that straightened out. Our GG cracker business and taking it back in the U.S. and a lot of great things happening from there, so we have a lot of things lined up, throughout 2012 Andrew. We are in the midst of converting our personal care product line to all new ingredients and let me tell you something. You just had Johnson & Johnson come out and say we're going take formaldehyde out of our products by 2013-2014. There is absolutely never had been formaldehyde in any one of our products, but just what we're seeing on calls and demand on our personal care products and like, oh my god, you're really telling me that was in our products. Again, it comes back from our growth, our distribution. I really think we got our hands around procurement and purchasing. Yes, there is some risk out there from commodities but our guys have been buying natural organic ingredients for long time and have really got their heads screwed on right where they buying it and where they are getting, how they are sourcing, so I think we really got a good plan in place and we feel good about executing. On the other hand, Whole Foods will open up 50 more stores. More and more Walmarts and Targets are bringing in more and more natural products. More and more products are wanted by Tesco and Sainsbury and Waitrose, so that's why we are feeling very, very, very good going into this year.

Great. That's helpful. Then just a quick one would be perhaps for Rob. I must say given all that you've done in the U.K. over the past sort of two years and such I must admit I probably lost a little bit of track of sort of where you are in the overall U.K. business with respect to sort of your capacity situation. I don't know what it looks like at Histon facility, but I think you remember Premier always had an issue with excess capacity and that perhaps Hain on your own core U.K. business you had some there as well, so I am just trying to get a sense like on a pro forma basis for all the businesses that you now own or will own in the U.K. is there any more significant opportunity to sort of get the overall sort of supply chain in a much better place, true-up kind of capacity to be much more consistent with where your demand is? What are the opportunities there, because I must admit, I’ve kind of lost track of it.

Certainly, particularly new acquisition for us Histon has got quite a bit of capacity and it's also got an interesting site within the boundaries that they are not using, so we've been taking a good look at that to see whether we can convert it into some NPD or perhaps take some snacks box from some co-packers etcetera, so Histon business is well invested and got quite a little bit of free capacity. Across the range of our businesses in the U.K, I mentioned in the release that we are building some capacity into Fakenham plant to facilitate a new business that's coming in there in 2013 and that's going to free that site up for a number of years. We have still got capacity in our core businesses in soup and drinks. We have not got a lot of capacity in fruit, but the reorganization of Luton site, which is now going to exit sandwiches, is going to enable that site to free up in fruit, salads and some high care innovation products, so we're feeling pretty good about the footprint at the moment. We're not anticipating any significant spend to enable us to get the growth that we need other than the one big CapEx at Fakenham, which just going to bring in this $40 million of new revenue in 2013.

Andrew being at your own manufacturing in U.K. is important, because retailers come back and say, if you're not your own manufacturing, you just got a brand. Why do I need your brand because I'm paying more for or I can go outside anywhere else because my brand is the strongest, so having a factory there in U.K. has some most of our factories and we think our facilities that we are acquiring can really do a lot of the Hain ambient product that either we're shipping over there now and bring it into the Histon plant. By the way Premier did invest heavily into that facility. That was one of the facilities that they consolidated as they acquired this and really are focused on it and really spent a lot of money in that plant. There was no shortage of capital put into that facility.

Got it. Thank you.

You're welcome. Thank you.

Your next question comes from the line of David Palmer with UBS.

Hi. This is actually Mineo filling in for Dave.

How are you?

Fine. Thanks. First of all, congratulations on the quarter, of course.

Thank you.

You're welcome. Clearly you've had some great momentum here with solid consumption and like-for-like growth. Given these trends and this momentum, how are you thinking about the reinvestment of incremental dollars? I mean, you've mentioned sales realignment, but do you perhaps see potential upside or improving ROI from increased advertising or marketing for example?

Well, listen. I think, if we come back and you heard what we said, as we go after the younger consumer and the way we are marketing the consumer today through social media, through our networks, and I think a big part of our growth that came whether it was our key business, a big part of our growth with Earth's Best is being out there in front of the consumer. It doesn't mean we got to be advertising on the Olympics for the Super Bowl. It means we got to be reminding our consumers who are buying healthier products all the time. From the standpoint of that, our consumers are educated. Our consumers are expecting value and our consumers are re-labeled, so telling the consumer about our product is something very important and that is something that we will continuously heavily invest in. We are spending a lot more money in the U.S. this year on consumer advertising, and we'll continue to spend a lot more money in the U.K. to take these brands that we're acquiring. We're spending a lot of money this year on New Covent Garden. It's the number one fresh soup to take it to a whole other level, so yes there is a big investment to the consumer on our part. You can't starve brands and we've seen what happens when you starve brands.

Great. Thank you.

You're welcome.

(Operator Instructions). Your next question comes from the line of Eric Larson with C.L. King.

Operator, I think he has dropped off. Can we take the next question?

Your next question comes from the line of Sean Naughton with Piper Jaffray.

Hi, guys. Congrats on the U.S. operating margin expansion. Very solid execution there.

Thank you.

There's a couple of quick questions. One, Irwin, you have such great visibility across all the different channels. Maybe just giving us a little bit of a deeper look kind of in that independent natural and organic space, are you seeing some of the nice consumption trends there that you are seeing across the rest of the channels? Secondly, maybe just your outlook as you look into FY'13 given some of the crop conditions we're hearing about today. What is your assumption around inflation for FY'13, and then how did retailers kind of react to this October 1 price increase? Thank you.

I'm going to let John and he's got great visibility too, so John just on the independent. Just touch base on that and then I will come back to commodity.

Well, actually in terms of the natural independents, we've actually seen their momentum as the channel accelerate. Actually where they were previously dragging behind the rest of the categories, they are now growing as quickly as anybody in natural and organic.

That's interesting, because basically lot of the independents grew with vitamins and they were more perceived as a pill shop, and it is really good to see the independent back growing again because they were flat if not down for many, many years, so we continue to see good growth among the independents and lot of new independent stores continuously opening up. In regards to commodities, I think from a standpoint the team has gone out and bought out on commodities and have protected ourselves. With that, we got to make sure we absolutely have delivery in that. I come back and I say this here, Sean, I think, yes. There is some concern out there from commodities. We had to take pricing and we will get pricing and we've had a situation, where we get into a major retailer and we got major pricing, because they saw what? The commodity went up. At the end of the day, I think you are going to see commodities back off. I think, there's probably $1 or $2, a bushel speculation in corn and soybean, I think you're going to see demand fall off, so I think, yes. We did have drought, but I think we will be able to source a lot of commodities all over the world and that's a big factor within Hain today. Jim Meiers and his group had a worldwide procurement meeting in July for all our divisions to start procuring from. Now we, with Daniels, with Europe's Best in Canada, with all our facilities in the U.S. and now with the acquisition, with the amount of companies we have buying fruits and vegetables and commodities today, it just gives us the ability to buy so much better and to buy all over the world and we are buying in Africa and South America where before we just weren't able to do that. With that, yes. We are all on the same boat. The only difference is we are out there buying a lot more organic than anybody else and we are out there buying GMO-free, and we have such experienced teams that I will say it's not going to be a problem, but we are definitely on top of it.

Okay. It looks like you guys are looking for gross margin expansion next year, and I guess the way to think about that is, you're looking to offset whatever inflation does come through the channel with continued productivity gains, and sales mix and maybe some pricing actions. Is that the right way to think about it?

Exactly. We took a price increase in July. We will not see the full effect of that probably until next March or April. I was going through some things today, where we had 5% reduction on packaging and need to continue to focus on those things and efficiencies, consolidate brands, consolidate some of our manufacturing, so that is a big thing that we have in place here that we will continue to do.

Okay. Great. Best of luck in FY'13.

Thank you.

Your next question comes from the line of Doug Thomas with (Inaudible) Equity.

That's close enough. I sent Mary an e-mail. All I had was a one word line to my client that just said wow. I mean, it was a heck of a year, so you guys should all be congratulated. I appreciate the effort. A lot of people would have cut and run from the U.K, Irwin and you didn't. You figured out how to make it work, and I think that's also a significant accomplishment. Maybe you could talk a little about how that all played out looking back the last couple of years, because clearly it's going to be a big success for you. The question I have really is for John. It has to do with one of the last questions and has to do with sort of being on the tip of the iceberg in terms of some of these large national accounts where you have teams in place, and I am wondering what the real marketing opportunity, what the leverage. Irwin you talked about leverage. We've got these loyalty cards and these tailored marketing programs for their customers and I'm wondering if you guys will be able to benefit from all of that.

Number one, thank you Doug for the wow, and I really appreciate that, and you've been here when there was lot of boos too, so and it's great to get wows. Again, arrogance and business don't get along, so we just don't take those wows and fly high in as well, because we know those who live in glass houses, there's a lot of rocks that can be thrown at you and that was the case in the U.K, and we've had many calls of a lot of investors and a lot of analysts that just get out of the U.K. run away from it. In those times I thought the same thing, but a couple of big things that I can back and say in the U.K. I really believe we found the right mix of brands, I really believe we found the right categories. I know we have found a great management team and we have had some trip up with the management team in running these businesses. Last but not least, going out and looking at the Premier business, moving back and forth many, many times and said is it on strategy? Is it perfect? I think what happens sometimes, there is not the perfect fit, there is not the perfect life, there is not the perfect wife, there's not the perfect product, and with that if we don't look for perfection we would never be able to do anything, so I think what we came back and looked at what would be out there to really take our U.K. business? U.K. has some of the best retailers in the world, regards with Tesco and Waitrose and Sainsbury. Let me tell you something. There's a hell of a lot we've learnt, in the U.S., from our U.K. operation. There's a lot of innovation that we will take back from there and vice versa and there's lot of innovation that our U.K. retailers are looking from the U.S. to take back there, so it will become a big part of our business and I think we are getting in at the right price at the right time, when everybody is down on Europe or the U.K. but it's going to come back and we'll be there. In regards to the U.S., John, I think John and the team has done a great job in building teams and when you put teams in the place, the results will show. John?

Look, I think you asked in terms of support with these accounts and being able to get enough scale to take advantage of some of the programming with the accounts, and as Irwin talked about our increased marketing spend, we are definitely increasing our investment with our key accounts to drive consumption at these accounts. It's the most targeted way we can get our business distribution and our consumption growing.

I mean it seems to me, John, clearly the type of demographics your customer base should be. I don't know what the word I am looking for is, but they should be really able to be turned on by the sort of the power of these custom marketing efforts, especially as it relates to the brands that you guys have?

Absolutely, and these are brands that they actually want to be merchandising in their different vehicles because they bring customers in from all different channels.

I would also think. My phone is almost dying, but I would also wonder when if some of the success you are seeing. Also down the road, I mean obviously, the success in the U.S. marketplace which is a very competitive market, your ability to help your customers drive top line has to be helping you gain support overseas. I'm talking maybe even outside of Great Britain and maybe even in Europe. I think from a contrarian point of view that this isn't a bad time. I see there is a headline about is investing in Greece today, which I thought was kind of interesting but you know your ability to help your customers demonstrate terrific results has to be beneficial for you as you seek to grow outside the U.S?

Exactly. I think, again, timing is everything, but I think what I said before who is buying natural organic today? It is your yogurt consumer who has disposable income and they will be consumers that will be around a long time, and that's where we want to build long-term relationship with and long-term equity with, so I think that's what happened to [Canso Soups], that's what's happens to sort of other products where they are no longer in vogue and the younger consumer is not buying it.

Just quickly. Any thoughts on the light weight spin-off?

I don't think it's appropriate for us to comment on that.

Okay. I am just asking. All right. Thank you guys. Congratulations again.

Thank you for the wow.

Sure.

Thank you.

We have time for one final question. Your final question comes from Amit Sharma, BMO Capital Markets.

Hi. Good afternoon, everyone.

Good afternoon.

Rob, I might have missed it. The $40 million sales opportunity for fiscal '13. Can you give us more details around that? What is that?

Yes. We are building a plant at the moment in Fakenham that will be online in May 13th, so actually really it's more of a fiscal '14 opportunity and there will be about $40 million new revenue in fiscal '14.

That will be frozen meals?

That is chilled.

Chilled meal? Okay. got it. Then the distribution gains are a big story in the U.S. operation, but I imagine that the brands that you are acquiring over there are fully penetrated in U.K.?

Yes. The brands are pretty fully penetrated in multiple retail channel, but what we think is there has been a lack of investment in terms of the consumer and we think it was a great opportunity to leverage new positions for them in NPD and the U.S. brands?

The big thing here is, as you heard what Rob said, there's good distribution out there on the products, but how do we increase velocity? The major thing is here how do we really drive new product on these well known brands?

Sure. That make sense. Then one for Ira. Ira, you gave 47 million share count for next year. It's a little bit higher than what we have in '12. You are not counting for the share as part of the acquisition, right?

No. I am not. What we typically see because of stock compensation plans and other factors that our shares, typically increase by a little bit less than 1% a year just naturally.

All right. That's all I have. Thank you, guys.

With that this is the end of our call for our year end Q4 of 2012, our outlook and our overview for fiscal 2012, our 2013 forecast out there and talking about our acquisitions in the U.K. I sit here today and I am very proud to report these numbers, and proud because, number one, I get to work with a great team around the world. Hain, after this acquisition, will have close to 4,500 people worldwide. Hain was started in 1993 and today being one of the largest natural healthy organic food companies in the world and that we are changing the lives of so many people is something that feels great. On the other hand, with obesity being a major concern. You talk about healthcare, and not that I want to get into politics, but healthcare keeps coming up with Medicare and everything else. Eating healthy is one of the biggest cures and one of the biggest prevention of diseases out there, and we really feel we are in the right space and bringing users in at young age is what ultimately help a lot of the problems that face our nation today. With that thank you for listening to us on this lazy day of summer in August, and we look forward to reporting to you at the end of October early November, on our first quarter. Enjoy the rest of your summer. Have a safe Labor Day or bank holiday in the U.K. or wherever else around the world and have a good evening. Thank you.

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