WeightWatchers 2005 Annual Report Download - page 42

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The table below shows the consolidated income statements for fiscal 2005 and fiscal 2004 on a
comparable basis adjusted for these 2005 transaction expenses.
Fiscal 2005
Less Reported Results
Reported Transaction Less Transaction Fiscal Increase/
Results Expenses Expenses 2004 (Decrease)
(in millions, except per share data)
Consolidated Results
Revenues ............................ $1,151.3 $ — $1,151.3 $1,024.9 $126.4
Cost of revenues ....................... 520.7 — 520.7 487.1 33.6
Gross profit ......................... 630.6 — 630.6 537.8 92.8
Marketing expenses ..................... 158.3 — 158.3 134.8 23.5
Selling, general and administrative expenses . . . 169.8 46.4 123.4 97.1 26.3
Operating income ..................... 302.5 (46.4) 348.9 305.9 43.0
Interest expense, net .................... 21.0 — 21.0 16.8 4.2
Other (income)/expense, net ............... 2.2 — 2.2 (4.7) 6.9
Early extinguishment of debt .............. — — — 4.3 (4.3)
Income before taxes and cumulative effect of
accounting change .................... 279.3 (46.4) 325.7 289.5 36.2
Provision for income taxes ................ 104.9 (18.8) 123.7 94.5 29.2
Income before cumulative effect of accounting
change ............................. 174.4 (27.6) 202.0 195.0 7.0
Cumulative effect of accounting change ...... — — — (11.9) 11.9
Net income ........................... $ 174.4 $(27.6) $ 202.0 $ 183.1 $ 18.9
Weighted averge diluted common shares
outstanding ......................... 104.2 104.2 104.2 107.0
Diluted EPS .......................... $ 1.67 $(0.27) $ 1.94 $ 1.71 $ 0.23
Our consolidated reported net income was $174.4 million for fiscal 2005. This included transaction
expenses of $46.4 million, $27.6 million net of taxes. Absent these expenses, net income was
$202.0 million as compared to $183.1 million in fiscal 2004.
While our fiscal 2005 consolidated results included 12 months of WeightWatchers.com results, our
fiscal 2004 consolidated results included only nine months of WeightWatchers.com due to the timing of
the adoption of FIN 46R at the beginning of the second quarter of fiscal 2004. The impact of
consolidating WeightWatchers.com for all four quarters in fiscal 2005 compared to the three quarters in
fiscal 2004 represented $24.3 million of the increase in total revenues, and $17.6 million and
$5.6 million of the increase in gross profit and operating income, respectively, as described in more
detail below.
Net revenues were $1,151.3 million for fiscal 2005, an increase of $126.4 million, or 12.3%, from
$1,024.9 million for fiscal 2004. The $126.4 million increase was driven by a $52.0 million increase in
meeting fees, a $44.7 million increase in online revenues (including $26.3 million attributable to the
first quarter of fiscal 2004 which, as mentioned above, was not included in the consolidated results for
the full fiscal year 2004), a $21.5 million increase in licensing revenues, and a $10.8 million increase in
product sales. Due to the timing of the adoption of FIN 46R, our fiscal 2004 consolidated results
included one quarter of WeightWatchers.com royalty income of $2.0 million. Included in the
$126.4 million increase in net revenues is a benefit of approximately $3.8 million from foreign currency
exchange rates.
For fiscal 2005, total meeting fees were $681.1 million, an increase of $52.0 million, or 8.3%, from
$629.1 million in fiscal 2004. Total attendances increased 1.7% reaching 60.9 million versus 59.9 million
in the prior year period. Meeting fee growth outpaced attendance growth primarily as a result of price
increases in NACO and the United Kingdom.
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