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Section 1: 8-K (FORM 8-K)

Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): February 25, 2019

 

 

WEIGHT WATCHERS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Virginia   001-16769   11-6040273

(State or other jurisdiction

of incorporation)

 

(Commission File

Number)

 

(IRS Employer

Identification No.)

 

675 Avenue of the Americas, 6th Floor, New York, New York   10010
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (212) 589-2700

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐


Item 2.02.     Results of Operations and Financial Condition.

The information contained in Item 2.02 of this Current Report on Form 8-K, including the text of the press release attached as Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information contained in Item 2.02 and Item 9.01 of this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document or filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

On February 26, 2019, Weight Watchers International, Inc. (the “Company”) issued a press release announcing its financial results for its fiscal quarter and fiscal year ended December 29, 2018. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On February 25, 2019, Philippe J. Amouyal and Cynthia Elkins (the “Resigning Directors”) notified the Company’s Secretary of their respective resignations as directors of the Company, effective as of February 26, 2019 at 11:59 p.m. Neither of the Resigning Director’s decision was the result of any disagreement with the Company or the Board of Directors of the Company (the “Board”). In order to fill the vacancy created by Mr. Amouyal’s resignation, the Board unanimously elected Julie Bornstein as a Class III director of the Company, effective as of 12:00 a.m. on February 27, 2019. Ms. Bornstein’s term will expire at the Company’s 2019 annual meeting of shareholders (the “2019 Annual Meeting”). In order to fill the vacancy created by Ms. Elkins’ resignation, the Board unanimously elected Tracey D. Brown (together with Ms. Bornstein, the “New Directors”) as a Class I director of the Company, effective as of 12:00 a.m. on February 27, 2019. Ms. Brown’s term will expire at the Company’s 2020 annual meeting of shareholders, subject to her election by the Company’s shareholders at the 2019 Annual Meeting as required under the laws of the Commonwealth of Virginia. Ms. Brown will also serve on the Board’s Audit Committee.

There were no arrangements or understandings pursuant to which either of the New Directors was elected as a director, and there are no related party transactions between the Company and either of the New Directors reportable under Item 404(a) of Regulation S-K. The Board has affirmatively determined that each of the New Directors qualifies as an “independent director” under Nasdaq listing standards.

The New Directors will receive the Company’s standard compensation provided to all the Company’s non-employee directors for service on the Board (currently $150,000 per annum, payable quarterly, half in cash and half in fully vested common stock of the Company, no par value per share (the “Common Stock”)). Ms. Brown will also receive the Company’s standard compensation provided to members of the Audit Committee for service thereon (currently $10,000 per annum, payable quarterly, in cash). Such amounts shall be prorated with respect to fiscal 2019 based on the New Directors’ time of service on the Board, and in the case of Ms. Brown, the Audit Committee, during the first fiscal quarter of 2019. All shares of Common Stock granted to a director are subject to transfer restrictions such that the shares cannot be sold or transferred until the earlier of (i) the director no longer serving on the Board or (ii) following the proposed sale or transfer of any such shares, the applicable director continuing to hold shares of Common Stock with a value of at least $600,000 in the aggregate, such value based on the closing price of the Common Stock on the date of such director’s request for permission to consummate such sale or transfer pursuant to the Company’s Amended and Restated Securities Trading Policy, and any successor policy thereof.

Item 7.01. Regulation FD Disclosure.

A copy of the Company’s press release announcing the New Directors’ election to the Board has been furnished as Exhibit 99.2 to this Current Report on Form 8-K.

Item 9.01.     Financial Statements and Exhibits.

 

  (d)  

Exhibits.

 

Exhibit

  

Description

Exhibit 99.1    Press Release dated February 26, 2019 regarding financial results.
Exhibit 99.2    Press Release dated February 26, 2019 regarding New Directors.

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

        WEIGHT WATCHERS INTERNATIONAL, INC.
DATED: February 26, 2019     By:   /s/ Nicholas P. Hotchkin
    Name:   Nicholas P. Hotchkin
    Title:   Chief Financial Officer

 

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Section 2: EX-99.1 (EX-99.1)

EX-99.1

Exhibit 99.1

 

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For more information, contact:

 

Investors:

   Media:

Corey Kinger, WW

   Megan Bishop, Teneo Strategy for WW

212.601.7569

   917.544.0071

corey.kinger@weightwatchers.com

   megan.bishop@teneostrategy.com

WW Announces Fourth Quarter

and Full Year 2018 Results

Provides Full Year 2019 Guidance

 

   

End of Period Subscribers up 22% year-over-year to 3.9 million

 

   

Total Paid Weeks in Q4 2018 up 23% year-over-year; Total Paid Weeks in FY 2018 up 26% year-over-year

 

   

Revenues in Q4 2018 of $330 million, up 6%, or 7% on a constant currency basis, year-over-year; FY 2018 Revenues of $1.5 billion, up 16%, or 15% on a constant currency basis, year-over-year

 

   

FY 2019 guidance: Revenues of approximately $1.4 billion and EPS range of $1.25 to $1.50

NEW YORK (Feb. 26, 2019) – Weight Watchers International, Inc. (NASDAQ: WTW) (“WW”) today announced its results for the fourth quarter and full year fiscal 2018 and provided its full year fiscal 2019 guidance.

“2018 was a significant year for WW. We launched WW FreestyleTM, built an expanded technology ecosystem, rebranded to WW and reinforced our mission to become the world’s partner in wellness,” said Mindy Grossman, the Company’s President and CEO. “While we are proud of our accomplishments in 2018, we had a soft start to 2019 versus last year’s strong performance with the launch of WW Freestyle. Given our Winter Campaign did not recruit as expected, we have been focused on improving member recruitment trends. We quickly moved to course correct, including introducing new creative with a stronger call-to-action and further optimizing our media mix.”

Grossman continued, “While we are disappointed with our start to 2019, we are confident that our strategy to focus on providing holistic wellness solutions leveraging our best-in-class weight management program is the right path to support long-term sustainable growth. Looking ahead, I’m happy to say that Oprah Winfrey will play a central role in our upcoming TV and digital marketing campaign for Spring, bringing to life a clear message on how WW is the program that works. Together with Oprah, we are also working on an initiative to galvanize and bring together communities through a series of digital and live experiences and events to accelerate WW’s impact and allow us to reach new and diverse audiences. We will announce more details in the coming months, but anticipate the initiative will kick off later in 2019.”

 

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“2018 was an exceptional year, with strong member recruitment, revenue growth and margin expansion,” said Nick Hotchkin, the Company’s CFO. “However, due to the soft start to the key Winter Season, we expect member recruitment for 2019 to be below 2018 levels, resulting in lower revenue and earnings for the year. We are focused on driving member recruitment and exercising strict cost discipline, while continuing to invest in the areas that will drive future growth.”

Q4 2018 Consolidated Results

 

                   % Change     % Change
Adjusted for
Constant
Currency(1)
 
     Three Months Ended  
     December 29,
2018
     December 30,
2017
 
 

(in millions except percentages and per share amounts)

          

Service Revenues, net

   $ 288.8      $ 264.0        9.4     10.9

Product Sales and Other, net

     41.6        48.5        (14.3 %)      (13.1 %) 
  

 

 

    

 

 

      

Revenues, net

   $ 330.4      $ 312.5        5.7     7.2

Operating Income

   $ 80.3      $ 49.5        62.4     65.0

Adjustments

          

Goodwill Impairment

     —          13.3       
  

 

 

    

 

 

      

Adjusted Operating Income(1)

   $ 80.3      $ 62.8        27.9     30.0

Net Income*

   $ 43.8      $ 63.0        (30.5 %)      (29.0 %) 

EPS

   $ 0.63      $ 0.91        (31.5 %)      (30.1 %) 

Total Paid Weeks

     53.8        43.8        22.8     N/A  

Digital(2) Paid Weeks

     34.7        25.7        34.6     N/A  

Studio + Digital(3) Paid Weeks

     19.2        18.1        6.0     N/A  

End of Period Subscribers(4)

     3.9        3.2        22.4     N/A  

Digital Subscribers

     2.6        2.0        32.1     N/A  

Studio + Digital Subscribers

     1.3        1.3        7.1     N/A  

 

Note: Totals may not sum due to rounding.

(1) See “Reconciliation of Non-GAAP Financial Measures” attached to this release for further detail on adjustments to GAAP financial measures.

(2) “Digital” refers to providing subscriptions to the Company’s digital product offerings, including the Personal Coaching + Digital product.

(3) “Studio + Digital” refers to providing access to the Company’s weekly in-person workshops combined with the Company’s digital subscription product offerings to commitment plan subscribers. The “Studio + Digital” business also includes the provision of access to workshops for members who do not subscribe to commitment plans, including the Company’s “pay-as-you-go” members.

(4) “Subscribers” refers to Digital subscribers and Studio + Digital subscribers who participate in recur bill programs in Company-owned operations.

*Except in the case of the financials attached to this release, “Net Income” refers to Net Income attributable to Weight Watchers International, Inc.

 

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Q4 2018 Business and Financial Highlights

 

   

End of Period Subscribers in Q4 2018 were up 22.4% versus the prior year period, driven by growth in all major geographic markets. Q4 2018 End of Period Digital Subscribers were up 32.1% and End of Period Studio + Digital Subscribers were up 7.1% versus the prior year period.

 

   

Total Paid Weeks in Q4 2018 were up 22.8% versus the prior year period, driven by growth in all major geographic markets. Q4 2018 Digital Paid Weeks increased 34.6% and Studio + Digital Paid Weeks increased 6.0% versus the prior year period.

 

   

Revenues in Q4 2018 were $330.4 million. On a constant currency basis, Q4 2018 revenues increased 7.2% versus the prior year period.

 

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Service Revenues in Q4 2018 were $288.8 million. On a constant currency basis, these revenues increased 10.9% versus the prior year period. This increase was primarily driven by growth in the North America and Continental Europe markets.

 

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Product Sales and Other in Q4 2018 were $41.6 million. On a constant currency basis, these revenues decreased 13.1% versus the prior year period.

 

   

Operating Income in Q4 2018 was $80.3 million compared to $49.5 million in the prior year period. After adjusting Q4 2017 operating income to exclude the $13.3 million goodwill impairment charge related to the Company’s Brazil operations, adjusted operating income in Q4 2018 of $80.3 million increased 30.0% on a constant currency basis versus the prior year period. This increase in adjusted operating income was primarily driven by an increased mix shift toward Digital revenues and operating leverage on higher revenues in the quarter versus the prior year period.

 

   

Income Tax in Q4 2018 was an expense of $0.9 million compared to a benefit of $54.7 million in the prior year period.

 

   

Net Income in Q4 2018 was $43.8 million compared to $63.0 million in the prior year period.

 

   

Earnings per fully diluted share (EPS) in Q4 2018 was $0.63 compared to $0.91 in the prior year period.

 

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Certain items affect year-over-year comparability.

 

 

The following items in the aggregate positively impacted Q4 2018 EPS by $0.17:

 

$0.12 per fully diluted share tax benefit due to the reversal of a valuation allowance related to foreign tax credits that have been fully utilized.

 

$0.05 per fully diluted share tax benefit due to the reversal of a valuation allowance related to certain net operating losses that are now expected to be realized.

 

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The following items in the aggregate positively impacted Q4 2017 EPS by $0.54:

 

$0.82 per fully diluted share arising from the one-time net tax benefit principally due to a remeasurement of net deferred tax liabilities under the new U.S. tax law.

 

($0.19) per fully diluted share arising from the goodwill impairment charge related to the Company’s Brazil operations.

 

($0.09) per fully diluted share arising from the negative net impact associated with the Company’s Q4 2017 refinancing of $1.9 billion of debt.

Full Year 2018 Consolidated Results

 

                   % Change     % Change
Adjusted for
Constant
Currency(1)
 
     Twelve Months Ended  
     December 29,
2018
     December 30,
2017
 

(in millions except percentages and per share amounts)

          

Service Revenues, net

   $ 1,273.2      $ 1,081.7        17.7     16.7

Product Sales and Other, net

     240.9        225.2        7.0     5.3
  

 

 

    

 

 

      

Revenues, net

   $ 1,514.1      $ 1,306.9        15.9     14.7

Operating Income

   $ 389.0      $ 267.3        45.5     44.2

Adjustments

          

Goodwill Impairment

     —          13.3       
  

 

 

    

 

 

      

Adjusted Operating Income(1)

   $ 389.0      $ 280.6        38.6     37.3

Net Income*

   $ 223.7      $ 163.5        36.8     35.4

EPS

   $ 3.19      $ 2.40        33.2     31.8

Total Paid Weeks

     227.9        181.5        25.5     N/A  

Digital(2) Paid Weeks

     144.6        105.2        37.5     N/A  

Studio + Digital(3) Paid Weeks

     83.3        76.4        9.1     N/A  

End of Period Subscribers(4)

     3.9        3.2        22.4     N/A  

Digital Subscribers

     2.6        2.0        32.1     N/A  

Studio + Digital Subscribers

     1.3        1.3        7.1     N/A  

 

 

Note: Totals may not sum due to rounding.

(1) See “Reconciliation of Non-GAAP Financial Measures” attached to this release for further detail on adjustments to GAAP financial measures.

(2) “Digital” refers to providing subscriptions to the Company’s digital product offerings, including the Personal Coaching + Digital product.

(3) “Studio + Digital” refers to providing access to the Company’s weekly in-person workshops combined with the Company’s digital subscription product offerings to commitment plan subscribers. The “Studio + Digital” business also includes the provision of access to workshops for members who do not subscribe to commitment plans, including the Company’s “pay-as-you-go” members.

(4) “Subscribers” refers to Digital subscribers and Studio + Digital subscribers who participate in recur bill programs in Company-owned operations.

*Except in the case of the financials attached to this release, “Net Income” refers to Net Income attributable to Weight Watchers International, Inc.

 

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Full Year 2018 Business and Financial Highlights

 

   

Total Paid Weeks in fiscal 2018 were up 25.5% versus the prior year, driven by growth in all major geographic markets. Fiscal 2018 Digital Paid Weeks increased 37.5% and Studio + Digital Paid Weeks increased 9.1% versus the prior year.

 

   

Revenues in fiscal 2018 were $1,514.1 million. On a constant currency basis, fiscal 2018 revenues increased 14.7% versus the prior year.

 

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Service Revenues in fiscal 2018 were $1,273.2 million. On a constant currency basis, these revenues increased 16.7% versus the prior year. This increase was driven by growth in all major geographic markets.

 

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Product Sales and Other in fiscal 2018 were $240.9 million. On a constant currency basis, these revenues increased 5.3% versus the prior year.

 

   

Operating Income in fiscal 2018 was $389.0 million compared to $267.3 million in the prior year. After adjusting fiscal 2017 operating income to exclude the $13.3 million goodwill impairment charge related to the Company’s Brazil operations, adjusted operating income in fiscal 2018 of $389.0 million increased 37.3% on a constant currency basis versus the prior year. This increase in adjusted operating income was primarily driven by operating leverage on higher revenues in the year versus the prior year.

 

   

Income Tax in fiscal 2018 was an expense of $20.5 million. Income tax in fiscal 2017 was a benefit of $18.2 million.

 

   

Net Income in fiscal 2018 was $223.7 million compared to $163.5 million in the prior year.

 

   

EPS in fiscal 2018 was $3.19 compared to $2.40 in the prior year.

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Certain items affect year-over-year comparability.

 

   

The following items in the aggregate positively impacted full year fiscal 2018 EPS by $0.48:

 

$0.25 per fully diluted share tax benefit from Ms. Winfrey’s exercise of a portion of her stock options, as previously disclosed in March 2018.

 

$0.12 per fully diluted share tax benefit due to the reversal of a valuation allowance related to foreign tax credits that have been fully utilized.

 

$0.06 per fully diluted share tax benefit related to favorable tax return adjustments.

 

$0.05 per fully diluted share tax benefit due to the reversal of a valuation allowance related to certain net operating losses that are now expected to be realized.

 

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The following items in the aggregate positively impacted full year fiscal 2017 EPS by $0.75:

 

$0.83 per fully diluted share arising from the one-time net tax benefit principally due to a remeasurement of net deferred tax liabilities under the new U.S. tax law.

 

$0.18 per fully diluted share tax benefit that was offset by $0.01 per fully diluted share of expense, both related to the previously announced cessation of operations of the Company’s Spanish subsidiary.

 

$0.03 per fully diluted share arising from the positive impact of the reversal of certain tax reserves.

 

($0.20) per fully diluted share arising from the goodwill impairment charge related to the Company’s Brazil operations.

 

($0.08) per fully diluted share arising from the negative net impact associated with the Company’s $1.9 billion refinancing of debt in Q4 2017 and the Company’s debt prepayment in Q2 2017.

Other Items

 

   

Cash balance as of December 29, 2018 was $237.0 million. On that same date, the Company had no outstanding borrowings under its $150 million revolving credit facility.

 

   

Ticker Symbol: To further align with its global brand, the Company intends to change its ticker symbol on The Nasdaq Global Select Market to “WW” later this year. Until further details are announced, the Company will continue to trade under the symbol “WTW”.

Full Year Fiscal 2019 Guidance

The Company is providing its full year fiscal 2019 revenue guidance of approximately $1.4 billion and earnings guidance of between $1.25 and $1.50 per fully diluted share.

Fourth Quarter and Full Year 2018 Conference Call and Webcast

The Company has scheduled a conference call today at 5:00 p.m. ET. During the conference call, Mindy Grossman, President and Chief Executive Officer, and Nicholas Hotchkin, Chief Financial Officer, will discuss the fourth quarter and full year fiscal 2018 results and answer questions from the investment community. Live audio of the conference call will be simultaneously webcast on the Company’s corporate website, corporate.ww.com, in the Investors section under Presentations and Events. A replay of the webcast will be available on this site for approximately 90 days.

 

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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 results presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company has disclosed non-GAAP financial measures of operating results that exclude or adjust certain items. Operating income and operating income margin are discussed in this release both as reported (on a GAAP basis) and, with respect to the fourth quarter and full year fiscal 2017, as adjusted (on a non-GAAP basis), to exclude the impairment charge for the Company’s goodwill related to its Brazil operations. The Company also presents in the attachments to this release the non-GAAP financial measures earnings before interest, taxes, depreciation, amortization and stock-based compensation (“EBITDAS”) and earnings before interest, taxes, depreciation, amortization, stock-based compensation and goodwill impairment (“Adjusted EBITDAS”). In addition, the Company presents certain of its financial results on a constant currency basis in addition to GAAP results. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. In this release and any attachments, the Company calculates constant currency by calculating current-year results using prior-year foreign currency exchange rates.

Management believes these non-GAAP financial measures provide useful supplemental information for its and investors’ evaluation of the Company’s business performance and are useful for period-over-period comparisons of the performance of the Company’s business. While management believes that these non-GAAP financial measures are useful in evaluating the Company’s business, this information should be considered as supplemental in nature and should not 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 “Reconciliation of Non-GAAP Financial Measures” attached to this release and reconciliations, if any, included elsewhere in this release for a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures.

About Weight Watchers International, Inc.

WW – the new Weight Watchers – is a global wellness company and the world’s leading commercial weight management program. We inspire millions of people to adopt healthy habits for real life. Through our engaging digital experience and face-to-face group workshops, members follow our livable and sustainable program that encompasses healthy eating, physical activity, and a helpful mindset. With more than five decades of experience in building communities and our deep expertise in behavioral science, we aim to deliver wellness for all. To learn more about the WW approach to healthy living, please visit ww.com. For more information about our global business, visit our corporate website at corporate.ww.com.

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, including, in particular, revenue and 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 and wellness industry participants or the development of more effective or more favorably perceived weight management methods; the Company’s ability to continue to develop new, innovative services and products and enhance its existing services and products or the failure of its services, products or brands to continue to appeal to the market, or the Company’s ability to successfully expand into new channels of distribution or respond to

 

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consumer trends; the ability to successfully implement new strategic initiatives; the effectiveness of the Company’s advertising and marketing programs, including the strength of its social media presence; the impact on the Company’s reputation of actions taken by its franchisees, licensees, suppliers and other partners; the impact of the Company’s substantial amount of debt and its debt service obligations and debt covenants; the inability to generate sufficient cash to service the Company’s debt and satisfy its other liquidity requirements; uncertainties regarding the satisfactory operation of the Company’s technology or systems; the impact of security breaches or privacy concerns; the recognition of asset impairment charges; the loss of key personnel, strategic partners or consultants or failure to effectively manage and motivate the Company’s workforce; the inability to renew certain of the Company’s licenses, or the inability to do so on terms that are favorable to the Company; the expiration or early termination by the Company of leases; risks and uncertainties associated with the Company’s international operations, including regulatory, economic, political and social risks and foreign currency risks; uncertainties related to a downturn in general economic conditions or consumer confidence; the Company’s ability to successfully make acquisitions or enter into joint ventures, including its ability to successfully integrate, operate or realize the anticipated benefits of such businesses; the seasonal nature of the Company’s business; the impact of events that discourage or impede people from gathering with others or accessing resources; 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; the outcomes of litigation or regulatory actions; the impact of existing and future laws and regulations; the Company’s failure to maintain effective internal control over financial reporting; the possibility that the interests of Artal Group S.A., the largest holder of the Company’s common stock and a shareholder with significant influence over the Company, will conflict with the Company’s interests or the interests of 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 United States Securities and Exchange Commission (which are available on the SEC’s EDGAR database at www.sec.gov and via the Company’s website at corporate.ww.com).

 

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

UNAUDITED

 

     December 29,
2018
    December 30,
2017
 

ASSETS

    

Cash and cash equivalents

   $ 236,974     $ 83,054  

Other current assets

     129,450       125,934  
  

 

 

   

 

 

 

TOTAL CURRENT ASSETS

     366,424       208,988  

Property and equipment, net

     52,202       47,978  

Goodwill, franchise rights and other intangible assets, net

     960,815       956,857  

Other assets

     35,100       32,177  
  

 

 

   

 

 

 

TOTAL ASSETS

   $  1,414,541     $ 1,246,000  
  

 

 

   

 

 

 

LIABILITIES AND TOTAL DEFICIT

    

Portion of long-term debt due within one year

   $ 77,000     $ 82,750  

Other current liabilities

     264,316       260,277  
  

 

 

   

 

 

 

TOTAL CURRENT LIABILITIES

     341,316       343,027  

Long-term debt

     1,669,708       1,740,612  

Deferred income taxes, other

     208,547       173,880  
  

 

 

   

 

 

 

TOTAL LIABILITIES

   $ 2,219,571     $ 2,257,519  
  

 

 

   

 

 

 

Redeemable noncontrolling interest

     3,913       4,467  

Shareholders’ deficit

     (808,943     (1,015,986
  

 

 

   

 

 

 

TOTAL LIABILITIES AND TOTAL DEFICIT

   $ 1,414,541     $ 1,246,000  
  

 

 

   

 

 

 


WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF NET INCOME

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

UNAUDITED

 

     Three Months Ended  
     December 29,
2018
     December 30,
2017
 

Service revenues, net (1)

   $  288,834      $  263,983  

Product sales and other, net (2)

     41,552        48,505  
  

 

 

    

 

 

 

Revenues, net

     330,386        312,488  
  

 

 

    

 

 

 

Cost of services (3)

     118,181        123,010  

Cost of product sales and other

     26,985        27,027  
  

 

 

    

 

 

 

Cost of revenues

     145,166        150,037  
  

 

 

    

 

 

 

Gross profit

     185,220        162,451  

Marketing expenses

     36,464        42,090  

Selling, general and administrative expenses

     68,409        57,550  

Goodwill impairment

     —          13,323  
  

 

 

    

 

 

 

Operating income

     80,347        49,488  

Interest expense

     35,108        30,557  

Other expense, net

     600        195  

Early extinguishment of debt

     —          10,524  
  

 

 

    

 

 

 

Income before income taxes

     44,639        8,212  

Provision for (benefit from) income taxes

     912        (54,695
  

 

 

    

 

 

 

Net income

     43,727        62,907  

Net loss attributable to the noncontrolling interest

     58        62  
  

 

 

    

 

 

 

Net income attributable to Weight Watchers International, Inc.

   $ 43,785      $ 62,969  
  

 

 

    

 

 

 

Earnings Per Share attributable to Weight Watchers International, Inc.

     

Basic

   $ 0.65      $ 0.97  
  

 

 

    

 

 

 

Diluted

   $ 0.63      $ 0.91  
  

 

 

    

 

 

 

Weighted average common shares outstanding:

     
  

 

 

    

 

 

 

Basic

     66,895        64,607  
  

 

 

    

 

 

 

Diluted

     69,942        68,902  
  

 

 

    

 

 

 
(1)

Consists of net “Digital Subscription Revenues” and net “Studio + Digital Fees”. “Digital Subscription Revenues” consist of the fees associated with subscriptions for the Company’s Digital offerings, including the Personal Coaching + Digital product. “Studio + Digital Fees” consist of the fees associated with the Company’s subscription plans for combined workshops and digital offerings and other payment arrangements for access to workshops.

(2)

Consists of sales of consumer products in workshops and via e-commerce, revenues from licensing, magazine subscriptions, publishing and third-party advertising in publications and on the Company’s websites and sales from the By Mail product, other revenues, and franchise fees with respect to commitment plans and commissions.

(3)

Consists of cost of revenues and operating expenses for the Company’s Digital and Studio + Digital services.


WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF NET INCOME

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

UNAUDITED

 

     Twelve Months Ended  
     December 29,
2018
     December 30,
2017
 

Service revenues, net (1)

   $  1,273,196      $  1,081,679  

Product sales and other, net (2)

     240,925        225,232  
  

 

 

    

 

 

 

Revenues, net

     1,514,121        1,306,911  
  

 

 

    

 

 

 

Cost of services (3)

     508,477        486,293  

Cost of product sales and other

     139,234        127,969  
  

 

 

    

 

 

 

Cost of revenues

     647,711        614,262  
  

 

 

    

 

 

 

Gross profit

     866,410        692,649  

Marketing expenses

     226,319        200,797  

Selling, general and administrative expenses

     251,106        211,224  

Goodwill impairment

     —          13,323  
  

 

 

    

 

 

 

Operating income

     388,985        267,305  

Interest expense

     142,346        112,784  

Other expense, net

     2,578        472  

Early extinguishment of debt, net

     —          8,969  
  

 

 

    

 

 

 

Income before income taxes

     244,061        145,080  

Provision for (benefit from) income taxes

     20,493        (18,237
  

 

 

    

 

 

 

Net income

     223,568        163,317  

Net loss attributable to the noncontrolling interest

     181        197  
  

 

 

    

 

 

 

Net income attributable to Weight Watchers International, Inc.

   $ 223,749      $ 163,514  
  

 

 

    

 

 

 

Earnings Per Share attributable to Weight Watchers International, Inc.

     

Basic

   $ 3.38      $ 2.54  
  

 

 

    

 

 

 

Diluted

   $ 3.19      $ 2.40  
  

 

 

    

 

 

 

Weighted average common shares outstanding:

     
  

 

 

    

 

 

 

Basic

     66,280        64,329  
  

 

 

    

 

 

 

Diluted

     70,115        68,248  
  

 

 

    

 

 

 
(1)

Consists of net “Digital Subscription Revenues” and net “Studio + Digital Fees”. “Digital Subscription Revenues” consist of the fees associated with subscriptions for the Company’s Digital offerings, including the Personal Coaching + Digital product. “Studio + Digital Fees” consist of the fees associated with the Company’s subscription plans for combined workshops and digital offerings and other payment arrangements for access to workshops.

(2)

Consists of sales of consumer products in workshops and via e-commerce, revenues from licensing, magazine subscriptions, publishing and third-party advertising in publications and on the Company’s websites and sales from the By Mail product, other revenues, and franchise fees with respect to commitment plans and commissions.

(3)

Consists of cost of revenues and operating expenses for the Company’s Digital and Studio + Digital services.


WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

OPERATIONAL STATISTICS

(IN THOUSANDS, EXCEPT PERCENTAGES)

UNAUDITED

 

     Three Months Ended         
     December 29,      December 30,         
     2018      2017      Variance  

Digital Paid Weeks (1)

        

North America

     22,174        16,342        35.7

CE

     9,637        7,025        37.2

UK

     2,112        1,796        17.6

Other (2)

     729        575        26.9
  

 

 

    

 

 

    

 

 

 

Total Digital Paid Weeks

     34,652        25,738        34.6

Studio + Digital Paid Weeks (1)

        

North America

     13,182        12,336        6.9

CE

     2,878        2,681        7.3

UK

     2,507        2,438        2.8

Other (2)

     622        645        (3.6 %) 
  

 

 

    

 

 

    

 

 

 

Total Studio + Digital Paid Weeks

     19,189        18,100        6.0

Total Paid Weeks (1)

        

North America

     35,356        28,678        23.3

CE

     12,515        9,706        28.9

UK

     4,619        4,234        9.1

Other (2)

     1,351        1,220        10.8
  

 

 

    

 

 

    

 

 

 

Total Paid Weeks

     53,841        43,838        22.8

End of Period Digital Subscribers (3)

        

North America

     1,648        1,251        31.8

CE

     730        535        36.6

UK

     160        134        19.2

Other (2)

     56        44        24.9
  

 

 

    

 

 

    

 

 

 

Total End of Period Digital Subscribers

     2,594        1,964        32.1

End of Period Studio + Digital Subscribers (3)

        

North America

     910        866        5.1

CE

     210        189        11.3

UK

     174        162        7.3

Other (2)

     44        33        31.6
  

 

 

    

 

 

    

 

 

 

Total End of Period Studio + Digital Subscribers

     1,338        1,250        7.1

Total End of Period Subscribers (3)

        

North America

     2,558        2,117        20.9

CE

     940        724        30.0

UK

     334        296        12.7

Other (2)

     100        77        27.8
  

 

 

    

 

 

    

 

 

 

Total End of Period Subscribers

     3,932        3,214        22.4
(1)

The “Paid Weeks” metric reports paid weeks by WW customers in Company-owned operations for a given period as follows: (i) “Digital Paid Weeks” is the total paid subscription weeks for the Company’s digital subscription products (including Personal Coaching + Digital); (ii) “Studio + Digital Paid Weeks” is the sum of total paid commitment plan weeks which include workshops and digital offerings and total “pay-as-you-go” weeks; and (iii) “Total Paid Weeks” is the sum of Digital Paid Weeks and Studio + Digital Paid Weeks.

(2)

Represents Australia, New Zealand and emerging markets.

(3)

The “End of Period Subscribers” metric reports WW subscribers in Company-owned operations at a given period end as follows: (i) “End of Period Digital Subscribers” is the total number of Digital, including Personal Coaching + Digital, subscribers; (ii) “End of Period Studio + Digital Subscribers” is the total number of commitment plan subscribers that have access to combined workshops and digital offerings; and (iii) “End of Period Subscribers” is the sum of End of Period Digital Subscribers and End of Period Studio + Digital Subscribers.


WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

OPERATIONAL STATISTICS

(IN THOUSANDS, EXCEPT PERCENTAGES)

UNAUDITED

 

     Twelve Months Ended         
     December 29,
2018
     December 30,
2017
     Variance  

Digital Paid Weeks (1)

        

North America

     93,906        67,614        38.9

CE

     38,845        28,107        38.2

UK

     8,944        7,199        24.2

Other (2)

     2,899        2,274        27.5
  

 

 

    

 

 

    

 

 

 

Total Digital Paid Weeks

     144,594        105,194        37.5

Studio + Digital Paid Weeks (1)

        

North America

     57,305        52,073        10.0

CE

     12,574        11,266        11.6

UK

     10,886        10,324        5.4

Other (2)

     2,521        2,692        (6.4 %) 
  

 

 

    

 

 

    

 

 

 

Total Studio + Digital Paid Weeks

     83,286        76,355        9.1

Total Paid Weeks (1)

        

North America

     151,211        119,687        26.3

CE

     51,419        39,373        30.6

UK

     19,830        17,523        13.2

Other (2)

     5,420        4,966        9.1
  

 

 

    

 

 

    

 

 

 

Total Paid Weeks

     227,880        181,549        25.5

End of Period Digital Subscribers (3)

        

North America

     1,648        1,251        31.8

CE

     730        535        36.6

UK

     160        134        19.2

Other (2)

     56        44        24.9
  

 

 

    

 

 

    

 

 

 

Total End of Period Digital Subscribers

     2,594        1,964        32.1

End of Period Studio + Digital Subscribers (3)

        

North America

     910        866        5.1

CE

     210        189        11.3

UK

     174        162        7.3

Other (2)

     44        33        31.6
  

 

 

    

 

 

    

 

 

 

Total End of Period Studio + Digital Subscribers

     1,338        1,250        7.1

Total End of Period Subscribers (3)

        

North America

     2,558        2,117        20.9

CE

     940        724        30.0

UK

     334        296        12.7

Other (2)

     100        77        27.8
  

 

 

    

 

 

    

 

 

 

Total End of Period Subscribers

     3,932        3,214        22.4
(1)

The “Paid Weeks” metric reports paid weeks by WW customers in Company-owned operations for a given period as follows: (i) “Digital Paid Weeks” is the total paid subscription weeks for the Company’s digital subscription products (including Personal Coaching + Digital); (ii) “Studio + Digital Paid Weeks” is the sum of total paid commitment plan weeks which include workshops and digital offerings and total “pay-as-you-go” weeks; and (iii) “Total Paid Weeks” is the sum of Digital Paid Weeks and Studio + Digital Paid Weeks.

(2)

Represents Australia, New Zealand and emerging markets.

(3)

The “End of Period Subscribers” metric reports WW subscribers in Company-owned operations at a given period end as follows: (i) “End of Period Digital Subscribers” is the total number of Digital, including Personal Coaching + Digital, subscribers; (ii) “End of Period Studio + Digital Subscribers” is the total number of commitment plan subscribers that have access to combined workshops and digital offerings; and (iii) “End of Period Subscribers” is the sum of End of Period Digital Subscribers and End of Period Studio + Digital Subscribers.


WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PERCENTAGES)

UNAUDITED

 

                                 Q4 2018 Variance  
                                       2018  
                                       Constant  
     Q4 2018      Q4 2017      2018     Currency  
            Currency      Constant             vs     vs  
     GAAP      Adjustment      Currency      GAAP      2017     2017  

Selected Financial Data

                

Consolidated Company Revenues

   $  330,386      $  4,619      $  335,005      $  312,488        5.7     7.2

Consolidated Digital Subscription Revenues (1)

   $ 134,902      $ 2,077      $ 136,979      $ 104,012        29.7     31.7

Consolidated Studio + Digital Fees (2)

   $ 153,932      $ 1,941      $ 155,873      $ 159,971        (3.8 %)      (2.6 %) 

Consolidated Service Revenues (3)

   $ 288,834      $ 4,018      $ 292,852      $ 263,983        9.4     10.9

Consolidated Product Sales and Other (4)

   $ 41,552      $ 601      $ 42,153      $ 48,505        (14.3 %)      (13.1 %) 

North America

                

Digital Subscription Revenues (1)

   $ 89,675      $ 248      $ 89,923      $ 68,456        31.0     31.4

Studio + Digital Fees (2)

   $ 114,173      $ 310      $ 114,483      $ 117,694        (3.0 %)      (2.7 %) 

Service Revenues (3)

   $ 203,848      $ 558      $ 204,406      $ 186,150        9.5     9.8

Product Sales and Other (4)

   $ 24,410      $ 61      $ 24,471      $ 28,802        (15.2 %)      (15.0 %) 

Total Revenues

   $ 228,258      $ 618      $ 228,876      $ 214,952        6.2     6.5

CE

                

Digital Subscription Revenues (1)

   $ 36,140      $ 1,379      $ 37,519      $ 27,050        33.6     38.7

Studio + Digital Fees (2)

   $ 23,605      $ 863      $ 24,468      $ 23,547        0.2     3.9

Service Revenues (3)

   $ 59,745      $ 2,242      $ 61,987      $ 50,596        18.1     22.5

Product Sales and Other (4)

   $ 8,062      $ 293      $ 8,355      $ 9,046        (10.9 %)      (7.6 %) 

Total Revenues

   $ 67,807      $ 2,535      $ 70,342      $ 59,643        13.7     17.9

UK

                

Digital Subscription Revenues (1)

   $ 5,756      $ 185      $ 5,941      $ 5,590        3.0     6.3

Studio + Digital Fees (2)

   $ 11,124      $ 347      $ 11,471      $ 12,714        (12.5 %)      (9.8 %) 

Service Revenues (3)

   $ 16,880      $ 533      $ 17,413      $ 18,304        (7.8 %)      (4.9 %) 

Product Sales and Other (4)

   $ 5,340      $ 141      $ 5,481      $ 5,779        (7.6 %)      (5.2 %) 

Total Revenues

   $ 22,221      $ 673      $ 22,894      $ 24,083        (7.7 %)      (4.9 %) 

Other (5)

                

Digital Subscription Revenues (1)

   $ 3,331      $ 265      $ 3,596      $ 2,917        14.2     23.3

Studio + Digital Fees (2)

   $ 5,030      $ 421      $ 5,451      $ 6,017        (16.4 %)      (9.4 %) 

Service Revenues (3)

   $ 8,361      $ 686      $ 9,047      $ 8,934        (6.4 %)      1.3

Product Sales and Other (4)

   $ 3,738      $ 106      $ 3,844      $ 4,871        (23.3 %)      (21.1 %) 

Total Revenues

   $ 12,099      $ 793      $ 12,892      $ 13,805        (12.4 %)      (6.6 %) 
(1)

“Digital Subscription Revenues” consist of the fees associated with subscriptions for the Company’s Digital offerings, including the Personal Coaching + Digital product.

(2)

“Studio + Digital Fees” consist of the fees associated with the Company’s subscription plans for combined workshops and digital offerings and other payment arrangements for access to workshops.

(3)

“Service Revenues” equal “Digital Subscription Revenues” plus “Studio + Digital Fees”.

(4)

“Product Sales” are sales of consumer products in workshops and via e-commerce, and “Other” are revenues from licensing, magazine subscriptions, publishing and third-party advertising in publications and on the Company’s websites and sales from the By Mail product, other revenues, and, in the case of the consolidated financial results and Other reportable segment, includes franchise fees with respect to commitment plans and commissions.

(5)

Represents Australia, New Zealand, emerging markets and franchise revenues.


WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PERCENTAGES)

UNAUDITED

 

                                Full Year 2018 Variance  
                                      2018  
                                      Constant  
     Full Year 2018      Full Year 2017      2018     Currency  
            Currency     Constant             vs     vs  
     GAAP      Adjustment     Currency      GAAP      2017     2017  

Selected Financial Data

               

Consolidated Company Revenues

   $  1,514,121      $  (14,866   $  1,499,256      $  1,306,911        15.9     14.7

Consolidated Digital Subscription Revenues (1)

   $ 567,766      $ (5,496   $ 562,270      $ 416,722        36.2     34.9

Consolidated Studio + Digital Fees (2)

   $ 705,430      $ (5,506   $ 699,924      $ 664,957        6.1     5.3

Consolidated Service Revenues (3)

   $ 1,273,196      $  (11,002   $ 1,262,195      $ 1,081,679        17.7     16.7

Consolidated Product Sales and Other (4)

   $ 240,925      $ (3,864   $ 237,061      $ 225,232        7.0     5.3

North America

               

Digital Subscription Revenues (1)

   $ 378,678      $ (59   $ 378,619      $ 281,432        34.6     34.5

Studio + Digital Fees (2)

   $ 522,372      $ (181   $ 522,191      $ 493,800        5.8     5.7

Service Revenues (3)

   $ 901,050      $ (240   $ 900,810      $ 775,231        16.2     16.2

Product Sales and Other (4)

   $ 146,201      $ (54   $ 146,147      $ 135,117        8.2     8.2

Total Revenues

   $ 1,047,252      $ (295   $ 1,046,957      $ 910,349        15.0     15.0

CE

               

Digital Subscription Revenues (1)

   $ 149,571      $ (5,000   $ 144,571      $ 102,039        46.6     41.7

Studio + Digital Fees (2)

   $ 107,528      $ (4,233   $ 103,295      $ 93,723        14.7     10.2

Service Revenues (3)

   $ 257,099      $ (9,232   $ 247,867      $ 195,762        31.3     26.6

Product Sales and Other (4)

   $ 47,226      $ (2,619   $ 44,607      $ 43,461        8.7     2.6

Total Revenues

   $ 304,324      $  (11,850   $ 292,474      $ 239,223        27.2     22.3

UK

               

Digital Subscription Revenues (1)

   $ 25,557      $ (926   $ 24,631      $ 21,477        19.0     14.7

Studio + Digital Fees (2)

   $ 52,676      $ (2,046   $ 50,630      $ 52,161        1.0     (2.9 %) 

Service Revenues (3)

   $ 78,233      $ (2,972   $ 75,261      $ 73,639        6.2     2.2

Product Sales and Other (4)

   $ 28,839      $ (1,319   $ 27,520      $ 26,351        9.4     4.4

Total Revenues

   $ 107,071      $ (4,289   $ 102,782      $ 99,989        7.1     2.8

Other (5)

               

Digital Subscription Revenues (1)

   $ 13,961      $ 488     $ 14,449      $ 11,774        18.6     22.7

Studio + Digital Fees (2)

   $ 22,853      $ 955     $ 23,808      $ 25,273        (9.6 %)      (5.8 %) 

Service Revenues (3)

   $ 36,814      $ 1,442     $ 38,256      $ 37,047        (0.6 %)      3.3

Product Sales and Other (4)

   $ 18,643      $ 126     $ 18,769      $ 20,268        (8.0 %)      (7.4 %) 

Total Revenues

   $ 55,457      $ 1,569     $ 57,026      $ 57,316        (3.2 %)      (0.5 %) 
(1)

“Digital Subscription Revenues” consist of the fees associated with subscriptions for the Company’s Digital offerings, including the Personal Coaching + Digital product.

(2)

“Studio + Digital Fees” consist of the fees associated with the Company’s subscription plans for combined workshops and digital offerings and other payment arrangements for access to workshops.

(3)

“Service Revenues” equal “Digital Subscription Revenues” plus “Studio + Digital Fees”.

(4)

“Product Sales” are sales of consumer products in workshops and via e-commerce, and “Other” are revenues from licensing, magazine subscriptions, publishing and third-party advertising in publications and on the Company’s websites and sales from the By Mail product, other revenues, and, in the case of the consolidated financial results and Other reportable segment, includes franchise fees with respect to commitment plans and commissions.

(5)

Represents Australia, New Zealand, emerging markets and franchise revenues.


WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PERCENTAGES)

UNAUDITED

 

                              Q4 2018 Variance  
                                                       2018 Constant Currency  
     Q4 2018     Q4 2017           2018           2018  
                                           2018     vs     2018     vs  
           Currency      Constant                        vs     2017     vs     2017  
     GAAP     Adjustment      Currency     GAAP     Adjustment (1)      Adjusted     2017     Adjusted     2017     Adjusted  

Selected Financial Data

                      

Gross Profit

   $  185,220     $  2,624      $  187,844     $  162,451     $ —        $  162,451       14.0     14.0     15.6     15.6

Gross Margin

     56.1        56.1     52.0        52.0        

Selling, General and Administrative Expenses

   $ 68,409     $ 776      $ 69,185     $ 57,550     $ —        $ 57,550       18.9     18.9     20.2     20.2

Operating Income

   $ 80,347     $ 1,308      $ 81,655     $ 49,488     $  13,323      $ 62,811       62.4     27.9     65.0     30.0

Operating Income Margin

     24.3        24.4     15.8        20.1        
(1)

Excludes the impairment charge of $13,323 for the Company’s goodwill related to its Brazil operations.


WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS, EXCEPT PERCENTAGES)

UNAUDITED

 

                                          Full Year 2018 Variance  
                                          2018 Constant Currency  
     Full Year 2018     Full Year 2017           2018           2018  
                                          2018     vs     2018     vs  
           Currency     Constant                        vs     2017     vs     2017  
     GAAP     Adjustment     Currency     GAAP     Adjustment (1)      Adjusted     2017     Adjusted     2017     Adjusted  

Selected Financial Data

                     

Gross Profit

   $ 866,410     $ (9,114   $ 857,296     $ 692,649     $ —        $ 692,649       25.1     25.1     23.8     23.8

Gross Margin

     57.2       57.2     53.0        53.0        

Selling, General and Administrative Expenses

   $ 251,106     $ (687   $ 250,419     $ 211,224     $ —        $ 211,224       18.9     18.9     18.6     18.6

Operating Income

   $ 388,985     $ (3,590   $ 385,395     $ 267,305     $ 13,323      $ 280,628       45.5     38.6     44.2     37.3

Operating Income Margin

     25.7       25.7     20.5        21.5        
(1)

Excludes the impairment charge of $13,323 for the Company’s goodwill related to its Brazil operations.


WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(IN THOUSANDS)

UNAUDITED

 

     Three Months Ended     Twelve Months Ended  
     December 29,      December 30,     December 29,      December 30,  
     2018      2017     2018      2017  

Net Income

   $ 43,785      $ 62,969     $ 223,749      $ 163,514  

Interest

     35,108        30,557       142,346        112,784  

Taxes

     912        (54,695     20,493        (18,237

Depreciation and Amortization

     11,467        12,549       44,061        50,880  

Stock-based Compensation

     4,842        5,577       20,188        14,949  
  

 

 

    

 

 

   

 

 

    

 

 

 

EBITDAS

   $ 96,114      $ 56,957     $ 450,837      $ 323,890  

Goodwill Impairment (1)

     —          13,323       —          13,323  
  

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted EBITDAS

   $ 96,114      $ 70,280     $ 450,837      $ 337,213  
  

 

 

    

 

 

   

 

 

    

 

 

 
(1)

Impairment charge of the Company’s goodwill related to its Brazil operations.

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Section 3: EX-99.2 (EX-99.2)

EX-99.2

Exhibit 99.2

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For more information, contact:

Megan Bishop, Teneo for WW

+1 917.544.0071

megan.bishop@teneo.com

 

 

Julie Bornstein and Tracey D. Brown Join Board of Directors of WW – the new Weight Watchers

NEW YORK, February 26, 2019 – WW (NASDAQ: WTW) – the new Weight Watchers – today announced two board appointments: Julie Bornstein, Chief Executive Officer of a new venture-backed company she founded and previous Chief Operating Officer of Stitch Fix, and Tracey D. Brown, Chief Executive Officer of the American Diabetes Association. Philippe J. Amouyal, director since 2002, and Cynthia Elkins, director since 2014, will step down from the Board, effective midnight tonight.

“On behalf of the entire Board of Directors, I would like to thank Philippe and Cindy for their commitment and many invaluable contributions to WW,” said Raymond Debbane, Chairman of the WW Board of Directors. “With the addition of Julie and Tracey, the WW Board is gaining valuable diversity in perspective, background and industry experience. As we continue to evolve to become the world’s partner in wellness, I am confident that both Julie and Tracey will be instrumental in helping to guide the company through this transformation.”

Julie Bornstein

In addition to her new role as a WW director, Bornstein is Chief Executive Officer of a new venture-backed company she founded. Prior to her new venture, she served for more than two years as Chief Operating Officer of Stitch Fix, Inc., an online subscription styling service. In that role, she was responsible for strategy, marketing, creative, warehouse operations, client service, and the 3,400-person stylist organization. Bornstein joined Stitch Fix from Sephora, where she served as Chief Digital Officer. Under her leadership, Sephora grew its e-commerce business dramatically, introduced the industry’s leading loyalty program, and made significant investments in digital commerce.

Before joining Sephora, Bornstein served as Head of E-commerce at Urban Outfitters, where she built its online business. She also led the successful launch of Nordstrom’s e-commerce platform. Earlier in her career, Bornstein worked in merchandising at DKNY, business development at Starbucks, and investment banking at Robertson Stephens. She holds a BA and MBA from Harvard University and currently serves on the board of directors for Redfin.

Tracey D. Brown

Brown currently serves as Chief Executive Officer of the American Diabetes Association (ADA), the nation’s largest voluntary health organization and a global authority on diabetes. Brown joined the ADA in June 2018 after holding several senior roles at Sam’s Club, a division of Walmart, Inc. Most recently, she served as Senior Vice President of Operations and Chief Experience Officer, where she was responsible for creating meaningful member experiences, directing member strategy, marketing and branding, go-to-market execution, data and analytics and membership operations. Brown brings to WW more than 25 years of experience in driving global business growth, leveraging data to connect consumers with brands and creating omni-channel experiences to escalate customer loyalty.

 

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Prior to joining Sam’s Club, she was Chief Executive Officer and Managing Director of RAPP Dallas, a data-driven integrated marketing agency within Omnicom Group. Before RAPP, Brown served as Chief Operating Officer for direct marketing agency Direct Impact, where she coordinated strategic, tactical and overall company operations. Previously, she was director of worldwide consumer marketing for Advanced Micro Devices, where she drove global marketing and demand generation activity around the world, including China, India, Russia, France, Spain, Italy and Japan. Early in her career, Brown served in leadership positions at American Express, Proctor & Gamble and Exxon Mobil. She earned her MBA from Columbia Business School in New York and her bachelor’s degree in Chemical Engineering from the University of Delaware.

 

 

About WW

WW – the new Weight Watchers – is a global wellness company and the world’s leading commercial weight management program. We inspire millions of people to adopt healthy habits for real life. Through our engaging digital experience and face-to-face group workshops, members follow our livable and sustainable program that encompasses healthy eating, physical activity, and a helpful mindset. With more than five decades of experience in building communities and our deep expertise in behavioral science, we aim to deliver wellness for all. To learn more about the WW approach to healthy living, please visit ww.com. For more information about our global business, visit our corporate website at corporate.ww.com.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and beliefs, as well as a number of assumptions concerning future events. These statements are subject to risks, uncertainties, assumptions and other important factors. Readers are cautioned not to put undue reliance on such forward-looking statements because actual results may vary materially from those expressed or implied. The reports filed by the Company pursuant to United States securities laws contain discussions of these risks and uncertainties. The Company assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are advised to review the Company’s filings with the United States 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 corporate.ww.com).

 

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