WeightWatchers 2010 Annual Report Download - page 57

p
reviously reported, this charge, which reduced revenues in fiscal 2008 for current and prior year periods, an
d
which has now been paid, was related to an adverse ruling the Company received with respect to the impositio
n
o
f UK VAT on meeting fees collected by our UK subsidiary. After adjusting for this charge, 2010 revenue
s
increased by
$
51.1 million, or 3.7%, versus the prior year.
Our fiscal 2010 cost of revenues decreased b
y
1.4%, or $9.5 million, from $671.0 million in fiscal 2009 to
$
661.4 million in fiscal 2010. As previousl
y
reported, the Compan
y
recorded a char
g
e of $32.5 million in the
f
ourt
h
quarter o
ffi
sca
l
2009 re
l
ate
d
to pr
i
or
y
ears, as a resu
l
to
f
an a
d
verse UK se
lf
-emp
l
o
y
ment tax ru
li
n
g
r
e
l
ate
d
to t
h
ese
lf
-emp
l
o
y
ment status o
fi
ts UK
l
ea
d
ers. As t
h
eta
bl
ea
b
ove s
h
ows, a
f
ter a
dj
ust
i
n
gfi
sca
l
2009
f
o
r
this char
g
e, our cost of revenues in fiscal 2010 would have increased b
y
3.
6
% versus fiscal 2009.
S
ellin
g
,
g
eneral and administrative expenses were $183.2 million in fiscal 2010, an increase of $12.3
million, or 7.2%, versus fiscal 2009. In fiscal 2009, the Compan
y
recorded $5.5 million of restructurin
g
char
g
es
assoc
i
ate
d
w
i
t
h
t
h
e prev
i
ous
ly di
sc
l
ose
d
cost sav
i
n
g
s
i
n
i
t
i
at
i
ves. A
f
ter exc
l
u
di
n
g
t
h
e restructur
i
n
g
c
h
ar
g
es
f
ro
m
f
iscal 2009, fiscal 2010 sellin
g
,
g
eneral and administrative expenses would have increased b
y
$17.8 million, or
10.7%
,
versus
fi
sca
l
2009
.
The following summary table sets forth the reconciliation of selected financial data for both fiscal 2010 an
d
f
iscal 2009 on a comparable basis, after the three adjustments noted and discussed above are reflected:
(
in millions, exce
p
t
p
er share amounts
)
Revenues
,
n
e
t
Gross
Pro
fi
t
G
ros
s
Profit
%
O
peratin
g
I
ncome
O
perat
i
n
g
I
n
co
m
e
Margin %
N
et
I
ncom
e
A
ttri
bu
t
ab
l
e
to
C
om
p
an
y
Dil
u
t
ed
EP
S
F
i
scal 2010
.....................
$
1,452.0
$
790.6 54.4%
$
390.3 26.9%
$
194.2
$
2.5
6
Adjustments to Reported Amount
s
UK VAT Ruling Accrua
l
R
eversa
l
.................
(2
.
0) (2
.
0) (2
.
0) (1
.
3) (0
.
02)
T
ota
l
A
dj
ustment
s
........
(2
.
0) (2
.
0) (2
.
0) (1
.
3) (0
.
02)
Fiscal 2010, as ad
j
usted
(
1
)
.........
$1,450.0 $788.6 54.4%
$
388.3 2
6
.8% $192.9 $ 2.54
Fi
sca
l 2009
.....................
$1,398.9 $727.9 52.0%
$
356.7 25.5% $177.3 $ 2.30
A
d
justments to Reporte
d
Amount
s
Restructur
i
n
g
C
h
ar
g
e
.
........ — —
5
.
53
.
3
0
.
0
4
UK Se
lf
-emp
l
o
y
ment Tax
R
u
li
n
g
...................
— 32.5 32.5 22.7 0.2
9
T
otal Adjustment
s
.
.......
—
32.
5
38.0 26.0 0.33
Fiscal 2009, as ad
j
usted
(
1)
.........
$
1
,
398.9
$
760.
4
54.4%
$
394.6 28.2%
$
203.4
$
2.64
Note: Totals may not sum due to rounding
(1) “As adjusted” is a non-GAAP financial measure that adjusts certain selected financial data for fiscal 2010
and 2009. See “Non-GAAP Financial Measures” above for an ex
p
lanation of our use of non-GAA
P
financial measures.
N
et income attributable to the Compan
y
for fiscal 2010 of $194.2 million increased b
y
$16.9 million, or
9.5%, from $177.3 million in the prior
y
ear period. On an ad
j
usted basis, as noted in the table above, net incom
e
attributable to the Compan
y
would have been $192.9 million for fiscal 2010 as compared to $203.4 million for
f
iscal 2009, a decrease in 2010 of $10.4 million or 5.1%. Diluted earnin
g
s per share of $2.56 for fiscal 2010
increased b
y
$0.26, or 11.3%, from $2.30 in the prior
y
ear. After ad
j
ustin
g
fiscal 2010 and 2009 for the items as
noted in the table above, diluted earnin
g
s per share for fiscal 2010 would have been $2.54, as compared to $2.6
4
in fiscal 2009, a decrease in 2010 of $0.10 or 3.6% versus the prior
y
ear. Included in the fiscal 2010 diluted
earnin
g
s per share is a $0.05 char
g
e associated with the settlement of the California labor liti
g
ation.
41