Weight Watchers Announces Fourth Quarter and Full Year 2009 Results
NEW YORK, Feb. 25 /PRNewswire-FirstCall/ -- Weight Watchers International, Inc. (NYSE: WTW) today announced its results for the fourth quarter and full year 2009, which ended January 2, 2010. The Company's fourth quarter and full year 2009 consisted of 13 weeks and 52 weeks, respectively, while the Company's fourth quarter and full year 2008 consisted of 14 weeks and 53 weeks, respectively.
Fourth Quarter 2009 Results
For the 13-week fourth quarter of 2009, net revenues were $311.3 million versus $346.2 million for the 14-week fourth quarter of 2008. Adjusting the fourth quarter of 2008 to exclude a $9.2 million benefit from an accrual reversal associated with the previously reported adverse U.K. VAT ruling, net revenues for the fourth quarter of 2009 were down $25.7 million versus the prior year period.
As recently reported, the Company received an adverse tax ruling that its U.K. leaders should have been classified as employees as opposed to self-employed for U.K. tax purposes, which resulted in a $36.7 million charge ($25.6 million after-tax) for the period from April 2001 to the end of 2009. Net income for the fourth quarter of 2009 was $18.7 million, including this charge related to the U.K. self-employment tax ruling, versus $47.6 million in the fourth quarter of 2008, including the $9.2 million benefit ($6.2 million after-tax) associated with the U.K. VAT ruling. Net income for the fourth quarter of 2009, excluding these charges and adjusting the fourth quarter of 2008 to exclude the benefit associated with the U.K. VAT ruling, was $44.3 million versus $41.4 million for the prior year period.
Earnings per fully diluted share were $0.24 for the fourth quarter of 2009, including a $0.33 charge associated with the U.K. self-employment tax ruling, versus earnings per fully diluted share of $0.62 for the prior year period, including $0.08 for the benefit associated with the U.K. VAT ruling. Excluding theses items from the fourth quarters of 2009 and 2008, earnings per fully diluted share for the 13-week fourth quarter of 2009 were $0.57, up $0.03 per fully diluted share, versus $0.54 for the 14-week fourth quarter of 2008.
The following table sets forth earnings per fully diluted share for the fourth quarter of 2009 as reported and as adjusted for the current and prior years' net impact of the U.K. self-employment tax ruling, and earnings per fully diluted share for the fourth quarter of 2008 as reported and as adjusted for the prior years' benefit associated with the U.K. VAT tax ruling:
Fourth Quarter Results
----------------------
2009 2008
(13 weeks) (14 weeks)
---------- ----------
Earnings Per Fully Diluted Share, As Reported $0.24 $0.62
Net Impact of U.K. Tax Rulings, Prior Years 0.29 (0.08)
---- -----
0.53 0.54
Net Impact of U.K. Self-Employment Tax Ruling,
Current Year 0.04 -
---- ---
Earnings Per Fully Diluted Share, As Adjusted $0.57 $0.54
===== =====
Full Year 2009 Results
For the 52 weeks of full year 2009, net revenues were $1,398.9 million versus $1,535.8 million for the 53 weeks of full year 2008. Excluding from net revenues for the full year 2008 net charges of $18.7 million associated with the U.K. VAT ruling, net revenues for the full year 2009 were down $155.6 million versus the prior year.
Net income for the full year 2009 was $177.3 million, including a $36.7 million charge ($25.6 million after-tax) related to the U.K. self-employment tax ruling and $5.5 million in restructuring charges ($3.4 million after-tax) associated with the Company's previously reported cost savings initiatives, versus net income of $204.3 million for the full year 2008, including $18.7 million of net charges ($12.7 million after-tax) associated with the U.K. VAT ruling. Excluding these charges from the full years 2009 and 2008, net income for the full year 2009 was $206.3 million versus $217.0 million for the prior year.
Earnings per fully diluted share were $2.30 for the full year 2009, including a $0.33 charge associated with the U.K. self-employment tax ruling and $0.04 for restructuring charges associated with the Company's cost savings initiatives, versus earnings per fully diluted share for the full year 2008 of $2.60, including $0.17 for the net charges associated with the U.K. VAT ruling. Excluding these charges from the full years 2009 and 2008, earnings per fully diluted share were $2.68 for the 52 weeks of 2009 versus $2.77 for the 53 weeks of 2008.
The following table sets forth earnings per fully diluted share for the full year 2009 as reported and as adjusted for the current and prior years' net impact of the U.K. self-employment tax ruling and the restructuring charges associated with the Company's cost savings initiatives, and earnings per fully diluted share for the full year 2008 as reported and as adjusted for the prior years' net charges associated with the U.K. VAT tax ruling:
Full Year Results
-----------------
2009 2008
(52 weeks) (53 weeks)
---------- ----------
Earnings Per Fully Diluted Share, As Reported $2.30 $2.60
Net Impact of U.K. Tax Rulings, Prior Years 0.29 0.17
Restructuring Charges 0.04 -
---- ---
2.64 2.77
Net Impact of U.K. Self-Employment Tax Ruling,
Current Year 0.04 -
---- ---
Earnings Per Fully Diluted Share, As Adjusted $2.68 $2.77
===== =====
Note: Totals may not sum due to rounding
Full Year 2010 Guidance
Commenting on the Company's full year 2009 results and 2010 guidance, David Kirchhoff, President and Chief Executive Officer of the Company, said, "In light of the difficult economic environment, I am gratified that we delivered full year 2009 results well within our original earnings guidance. As I look forward, I expect 2010 to remain challenging. While we will continue to aggressively manage our operations to maximize near-term results, we will also continue to invest in initiatives to modernize our offerings to drive long-term growth in our meetings business."
The Company provided full year 2010 earnings guidance of between $2.25 and $2.50 per fully diluted share.
Fourth Quarter and Full Year 2009 Conference Call
The Company has scheduled a conference call today at 5:00 p.m. ET. During the conference call, David Kirchhoff, President and Chief Executive Officer, and Ann Sardini, Chief Financial Officer, will discuss fourth quarter and full year 2009 results and answer questions from the investment community. Live audio of the conference call will be simultaneously webcast over the Internet on the Company's corporate website, www.weightwatchersinternational.com. A replay of the webcast will be available on this site for approximately 90 days.
Statement regarding Non-GAAP Financial Measures
The following provides information regarding non-GAAP financial measures used in this earnings release:
To supplement the Company's consolidated statement of operations presented in accordance with accounting principles generally accepted in the United States, or GAAP, the Company has disclosed non-GAAP measures of operating results that exclude or adjust certain items. Net revenues, net income and earnings per fully diluted share are discussed in this release both as reported (on a GAAP basis) and excluding from the fourth quarter and full year 2009 the impact of the recently reported adverse U.K. tax ruling relating to the self-employment status of the Company's U.K. leaders and restructuring charges associated with the Company's previously reported cost savings initiatives, and adjusting the fourth quarter and full year 2008 results to exclude the impact of the Company's previously reported adverse U.K. VAT tax ruling. Management believes these non-GAAP financial measures provide useful supplemental information to investors regarding the performance of the Company's business and are useful for period-over-period comparisons of the performance of the Company's business. While the Company believes that these financial measures are useful in evaluating the Company's business, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly entitled measures reported by other companies. See "Consolidated Statements of Operations" for the three months and full year ended January 2, 2010 and January 3, 2009 included with this release for a reconciliation of the non-GAAP financial measures excluding from the fourth quarter and full year 2009 the adverse U.K. tax ruling relating to the self-employment status of the Company's U.K. leaders and restructuring charges associated with the Company's cost savings initiatives, and adjusting the fourth quarter and full year 2008 results to exclude the impact of the U.K. VAT ruling to the most directly comparable GAAP measures.
About Weight Watchers International, Inc.
Weight Watchers International, Inc. is the world's leading provider of weight management services, operating globally through a network of Company-owned and franchise operations. Weight Watchers holds almost 50,000 meetings each week where members receive group support and learn about healthy eating patterns, behavior modification and physical activity. WeightWatchers.com provides innovative, subscription weight management products over the Internet and is the leading Internet-based weight management provider in the world. In addition, Weight Watchers offers a wide range of products, publications and programs for those interested in weight loss and weight control.
This news release and any attachments include "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, including, in particular, earnings guidance and any statements about the Company's plans, strategies and prospects. The Company generally uses the words "may," "will," "could," "expect," "anticipate," "believe," "estimate," "plan," "intend" and similar expressions in this news release and any attachments to identify forward-looking statements. The Company bases these forward-looking statements on its current views with respect to future events and financial performance. Actual results could differ materially from those projected in the forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things: competition from other weight management industry participants or the development of more effective or more favorably perceived weight management methods; the Company's ability to continue to develop innovative new services and products and enhance its existing services and products, or the failure of its services and products to continue to appeal to the market; the effectiveness of the Company's marketing and advertising programs; the impact on the Weight Watchers brand of actions taken by the Company's franchisees and licensees; risks and uncertainties associated with the Company's international operations, including economic, political and social risks and foreign currency risks; the Company's ability to successfully make acquisitions or enter into joint ventures, including its ability to successfully integrate, operate or realize the projected benefits of such businesses; uncertainties related to a downturn in general economic conditions or consumer confidence; the seasonal nature of the Company's business; the impact of events that discourage people from gathering with others; the Company's ability to enforce its intellectual property rights both domestically and internationally, as well as the impact of its involvement in any claims related to intellectual property rights; uncertainties regarding the satisfactory operation of the Company's information technology or systems; risks associated with unauthorized penetration of the Company's information security; the impact of disputes with the Company's franchise operators; the impact of existing and future laws and regulations; the impact of the Company's debt service obligations and restrictive debt covenants; the possibility that the interests of the Company's majority owner will conflict with the other holders of the Company's common stock; and other risks and uncertainties, including those detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission. You should not put undue reliance on any forward-looking statements. You should understand that many important factors, including those discussed herein, could cause the Company's results to differ materially from those expressed or suggested in any forward-looking statement. Except as required by law, the Company does not undertake any obligation to update or revise these forward-looking statements to reflect new information or events or circumstances that occur after the date of this news release or to reflect the occurrence of unanticipated events or otherwise. Readers are advised to review the Company's filings with the Securities and Exchange Commission (which are available from the SEC's EDGAR database at www.sec.gov, at various SEC reference facilities in the United States and via the Company's website at www.weightwatchersinternational.com).
Contact Information: |
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Investors: |
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Weight Watchers International, Inc. |
Brainerd Communicators, Inc. |
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Sarika Sahni |
Corey Kinger |
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Investor Relations |
(212) 986-6667 |
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(212) 589-2751 |
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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
UNAUDITED
January 2, January 3,
2010 2009
---- ----
ASSETS
Current assets $199.9 $225.0
Property and equipment, net 36.0 37.5
Goodwill, franchise rights and other
intangible assets, net 841.6 828.4
Deferred income taxes - 8.1
Other 10.0 7.7
---- ---
TOTAL ASSETS $1,087.5 $1,106.7
======== ========
LIABILITIES AND TOTAL DEFICIT
Current liabilities $536.0 $495.1
Long-term debt 1,238.0 1,485.0
Other 46.8 13.6
---- ----
TOTAL LIABILITIES 1,820.8 1,993.7
------- -------
Shareholders' deficit (736.5) (887.5)
Noncontrolling interest 3.2 0.5
--- ---
TOTAL DEFICIT (733.3) (887.0)
------ ------
TOTAL LIABILITIES AND TOTAL DEFICIT $1,087.5 $1,106.7
======== ========
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED
Three Months Ended (13 weeks)
January 2, 2010
-----------------------------
Impact of
U.K. Self-
Reported Employment Adjusted
Results Ruling Results
------- ------- -------
Revenues, net $311.3 $- $311.3
Cost of revenues 181.0 (36.7) 144.3
----- ----- -----
Gross profit 130.3 36.7 167.0
Marketing expenses 36.9 - 36.9
Selling, general and
administrative expenses 43.2 - 43.2
---- ---- ----
Operating income 50.2 36.7 86.9
Interest expense 16.3 - 16.3
Other expense (income), net 0.2 - 0.2
--- --- ---
Income before income taxes 33.7 36.7 70.4
Provision for income taxes 15.9 11.1 27.0
---- ---- ----
Net income 17.8 25.6 43.4
Net loss attributable to the
noncontrolling interest 0.9 - 0.9
--- --- ---
Net income attributable to WWI $18.7 $25.6 $44.3
===== ===== =====
Earnings Per Share attributable
to WWI:
Basic $0.24 $0.33 $0.58
===== ===== =====
Diluted $0.24 $0.33 $0.57
===== ===== =====
Weighted average common shares
outstanding:
Basic 77.0 77.0 77.0
==== ==== ====
Diluted 77.2 77.2 77.2
==== ==== ====
Three Months Ended (14 weeks)
January 3, 2009
-----------------------------
Net Impact
Reported of U.K. Adjusted
Results VAT Ruling Results
------- ---------- -------
Revenues, net $346.2 $(9.2) $337.0
Cost of revenues 161.6 - 161.6
----- --- -----
Gross profit 184.6 (9.2) 175.4
Marketing expenses 40.9 - 40.9
Selling, general and
administrative expenses 43.8 - 43.8
---- --- ----
Operating income 99.9 (9.2) 90.7
Interest expense 24.4 - 24.4
Other expense (income), net (0.7) - (0.7)
---- --- ----
Income before income taxes 76.2 (9.2) 67.0
Provision for income taxes 29.4 (3.0) 26.4
---- ---- ----
Net income 46.8 (6.2) 40.6
Net loss attributable to the
noncontrolling interest 0.8 - 0.8
--- --- ---
Net income attributable to WWI $47.6 $(6.2) $41.4
===== ===== =====
Earnings Per Share attributable
to WWI:
Basic $0.62 $(0.08) $0.54
===== ====== =====
Diluted $0.62 $(0.08) $0.54
===== ====== =====
Weighted average common shares
outstanding:
Basic 76.9 76.9 76.9
==== ==== ====
Diluted 77.1 77.1 77.1
==== ==== ====
------------
Note: Totals may not sum due to rounding.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED
Twelve Months Ended (52 weeks)
January 2, 2010
------------------------------
Impact of
U.K. Self- Impact of
Reported Employment Restructuring Adjusted
Results Ruling Charges Results
------- ------ ------- -------
Revenues, net $1,398.9 $- $- $1,398.9
Cost of revenues 671.0 (36.7) - 634.3
----- ----- --- -----
Gross profit 727.9 36.7 - 764.6
Marketing expenses 200.5 - - 200.5
Selling, general and
administrative expenses 170.8 - (5.5) 165.3
----- --- ---- -----
Operating income 356.6 36.7 5.5 398.8
Interest expense 66.7 - - 66.7
Other income, net (0.2) - - (0.2)
---- --- --- ----
Income before income
taxes 290.1 36.7 5.5 332.3
Provision for income taxes 115.6 11.1 2.1 128.8
----- ---- --- -----
Net income 174.5 25.6 3.4 203.5
Net loss attributable to
the noncontrolling
interest 2.8 - - 2.8
--- --- --- ---
Net income attributable
to WWI $177.3 $25.6 $3.4 $206.3
====== ===== ==== ======
Earnings Per Share
attributable to WWI:
Basic $2.30 $0.33 $0.04 $2.68
===== ===== ===== =====
Diluted $2.30 $0.33 $0.04 $2.68
===== ===== ===== =====
Weighted average common
shares outstanding:
Basic 77.0 77.0 77.0 77.0
==== ==== ==== ====
Diluted 77.1 77.1 77.1 77.1
==== ==== ==== ====
Twelve Months Ended (53 weeks)
January 3, 2009
------------------------------
Net
Impact of
Reported U.K. VAT Adjusted
Results Ruling Results
------- ------ -------
Revenues, net $1,535.8 $18.7 $1,554.5
Cost of revenues 700.8 - 700.8
----- --- -----
Gross profit 835.0 18.7 853.7
Marketing expenses 227.4 - 227.4
Selling, general and administrative
expenses 182.6 - 182.6
----- --- -----
Operating income 425.0 18.7 443.7
Interest expense 92.7 - 92.7
Other income, net (2.0) - (2.0)
---- --- ----
Income before income taxes 334.3 18.7 353.0
Provision for income taxes 132.0 6.0 138.0
----- --- -----
Net income 202.3 12.7 215.0
Net loss attributable to the
noncontrolling interest 2.0 - 2.0
--- --- ---
Net income attributable to WWI $204.3 $12.7 $217.0
====== ===== ======
Earnings Per Share attributable
to WWI:
Basic $2.61 $0.17 $2.78
===== ===== =====
Diluted $2.60 $0.17 $2.77
===== ===== =====
Weighted average common shares
outstanding:
Basic 78.2 78.2 78.2
==== ==== ====
Diluted 78.5 78.5 78.5
==== ==== ====
------------
Note: Totals may not sum due to rounding.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
OPERATIONAL STATISTICS
UNAUDITED
Three Months Ended
--------------------
January 3, 2009
Excluding
Net Impact
January 3, of U.K.
January 2, 2009 VAT Ruling
2010 Reported (14 weeks)
(13 weeks) (14 weeks) (2)
------------ ------------ -------------
Total Revenues
(in $ millions)
----------------
Meeting Fees 184.1 214.5 205.3
Product Sales 56.2 63.1 63.1
Internet Revenues 47.6 43.2 43.2
Franchise Commissions 2.6 3.1 3.1
All Other 20.8 22.2 22.2
---- ---- ----
Total Revenues 311.3 346.2 337.0
North America
(in $ millions)
----------------
Meeting Fees 119.7 144.1 144.1
Product Sales 30.3 35.8 35.8
---- ---- ----
Total 150.0 179.9 179.9
International
(in $ millions)
----------------
Meeting Fees 64.4 70.4 61.2
Product Sales 26.0 27.3 27.3
---- ---- ----
Total 90.4 97.7 88.5
Paid Weeks (in millions)(1)
North America Meeting
Paid Weeks 13.2 14.2 14.2
UK Meeting Paid Weeks 3.6 3.6 3.6
CE Meeting Paid Weeks 2.9 3.0 3.0
Other Meeting Paid Weeks 0.7 0.6 0.6
--- --- ---
Sub-total Meeting
Paid Weeks 20.4 21.4 21.4
Online Paid Weeks 10.2 9.4 9.4
---- --- ---
Total Paid Weeks 30.6 30.8 30.8
Attendance (in millions)
--------------------------
North America 6.4 7.8 7.8
UK 2.2 2.4 2.4
CE 1.8 2.1 2.1
Other 0.5 0.5 0.5
--- --- ---
Total Attendance 10.9 12.8 12.8
WeightWatchers.com
(in thousands)
-------------------
End of Period Active
Online Subscribers 763.0 679.0 679.0
------------
Note: Totals may not sum due to rounding.
(1) The Paid Week metric reports total paid weeks by Weight Watchers
customers in Company-owned operations for a given period. For
meetings, Paid Weeks is the sum of total paid commitment plan weeks
and total pay-as-you-go weeks for a given period. For Online, Paid
Weeks is the total paid Weight Watchers Online subscriber weeks for
a given period.
(2) In adjusting the fiscal 2008 reported results to exclude the net
impact of the previously reported adverse U.K. VAT ruling, the
reported results for "Total Revenues -- Meeting Fees", "Total
Revenues -- Total Revenues", "International -- Meeting Fees" and
"International -- Total" were adjusted by the aggregate amount of
$9.2 million.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
OPERATIONAL STATISTICS
UNAUDITED
Twelve Months Ended
---------------------
January 3, 2009
Excluding
Net Impact
January 3, of U.K. VAT
January 2, 2009 Ruling
2010 Reported (53 weeks)
(52 weeks) (53 weeks) (2)
----------- ----------- -------------
Total Revenues
(in $ millions)
----------------
Meeting Fees 817.5 908.0 926.7
Product Sales 292.1 339.8 339.8
Internet Revenues 196.0 185.8 185.8
Franchise Commissions 13.1 16.2 16.2
All Other 80.2 86.0 86.0
---- ---- ----
Total Revenues 1,398.9 1,535.8 1,554.5
North America
(in $ millions)
----------------
Meeting Fees 547.0 625.3 625.3
Product Sales 154.5 177.1 177.1
----- ----- -----
Total 701.4 802.4 802.4
International
(in $ millions)
----------------
Meeting Fees 270.6 282.8 301.5
Product Sales 137.6 162.7 162.7
----- ----- -----
Total 408.2 445.4 464.1
Paid Weeks
(in millions) (1)
-------------------
North America Meeting Paid Weeks 55.8 61.0 61.0
UK Meeting Paid Weeks 16.2 15.0 15.0
CE Meeting Paid Weeks 12.7 12.5 12.5
Other Meeting Paid Weeks 2.9 2.8 2.8
--- --- ---
Sub-total Meeting Paid Weeks 87.6 91.2 91.2
Online Paid Weeks 42.7 38.9 38.9
---- ---- ----
Total Paid Weeks 130.3 130.2 130.2
Attendance
(in millions)
--------------
North America 32.1 36.5 36.5
UK 11.4 11.6 11.6
CE 8.6 9.8 9.8
Other 2.1 2.2 2.2
--- --- ---
Total Attendance 54.3 60.0 60.0
WeightWatchers.com
(in thousands)
--------------------
End of Period Active
Online Subscribers 763.0 679.0 679.0
------------
Note: Totals may not sum due to rounding.
(1) The Paid Week metric reports total paid weeks by Weight Watchers
customers in Company-owned operations for a given period. For
meetings, Paid Weeks is the sum of total paid commitment plan weeks
and total pay-as-you-go weeks for a given period. For Online, Paid
Weeks is the total paid Weight Watchers Online subscriber weeks for
a given period.
(2) In adjusting the fiscal 2008 reported results to exclude the net
impact of the previously reported adverse U.K. VAT ruling, the
reported results for "Total Revenues -- Meeting Fees", "Total
Revenues -- Total Revenues", "International -- Meeting Fees" and
"International -- Total" were adjusted by the aggregate amount of
$18.7 million.
SOURCE Weight Watchers International, Inc.
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