WeightWatchers 2010 Annual Report Download - page 65

E
xcluding the charges noted above associated with the UK tax rulings in both fiscal years, gross profit o
f
$
764.6 million in fiscal 2009 declined by
$
89.1 million, or 10.4%, versus
$
853.7 million in fiscal 2008. Despite
a
10.0% decline in revenues, the Company’s adjusted gross margin was
5
4.7%, down just 20 basis points fro
m
5
4.9% in fiscal 2008 as a result of our variable cost business model and cost savings initiatives. Adjuste
d
o
perating income of
$
398.8 million in fiscal 2009 declined by
$
44.9 million, or 10.1%, versus
$
443.7 million in
f
iscal 2008; however, the fiscal 2009 adjusted operating income margin of 28.
5
% remained unchanged from prio
r
y
ear, benefiting from lower marketing expenses and selling, general and administrative expense savings.
The following table sets forth a reconciliation for fiscal 2009 and fiscal 2008 of certain selected financial
data set forth in the above “Summary of Selected Financial Data as Adjusted” table
:
(
In millions, exce
p
t
p
er share amounts
)
G
ros
s
Pr
o
fit
O
perat
i
n
g
In
co
m
e
N
et
I
ncom
e
A
ttr
i
butabl
e
to Company
D
i
lute
d
E
P
S
F
i
scal 2009 as Reported .....................................
$
727.9
$
356.6
$
177.3
$
2.3
0
A
dj
ustments to Reporte
d
Amount
s
I
mpact o
f
restructur
i
n
g
................................... —
5
.
5
3.4
0
.
04
UK se
lf
-emp
l
oyment ru
li
ng
i
mpact on 200
9
.
.................
4
.
24
.
22
.
9
0
.
04
UK self-employment ruling impact on prior years 2001 - 2008 . . . 32.
5
32.
5
22.7 0.29
T
ota
l
UK se
lf
-emp
l
o
y
ment ru
li
n
gi
mpac
t
................
36
.7
36
.7 2
5
.
60
.
33
T
otal Adjustments
..............................
36.7 42.2 2
9
.0 0.3
8
F
i
scal 2009 as Ad
j
uste
d
.....................................
$
764.6
$
398.8
$
206.3
$
2.6
8
G
ros
s
Pro
fi
t
O
perat
i
n
g
I
ncome
N
et Incom
e
A
ttr
i
butabl
e
to
C
ompany
D
i
lute
d
E
P
S
Fiscal 2008 as Reported
.....................................
$835.0 $425.0 $204.3 $2.6
0
A
d
justments to Reporte
d
Amount
s
UK VAT rulin
g
impact on prior
y
ears 2005 - 2007
.............
18
.7 1
8
.7 12.7
0
.1
7
F
i
scal 2008 as Ad
j
uste
d
.....................................
$
853.7
$
443.7
$
217.0
$
2.7
7
Note: Totals may not sum due to rounding
.
C
om
p
onents o
f
Revenue and Volume
s
The Company’s fiscal year ends on the Saturday closest to December 3
1
st
a
nd consists of either
5
2- o
r
5
3-week periods. Fiscal 2009 which began on January 4, 2009 and ended on January 2, 2010 contained
5
2 weeks
,
while fiscal 2008 which began on December 30, 2007 and ended on January 3, 2009 contained
5
3 weeks. Give
n
that fiscal 2009 began on January 4, 2009, for comparability, week 1 of fiscal 2008 (December 30, 2007 through
January 5, 2008) was excluded. The excluded extra week in fiscal 2008 contributed globally an additional
$
15.
8
million in net revenues, or 1.0%, and additional operating income of
$
3.3 million, or 0.8%, to fiscal 2008. Th
e
extra week also contributed globally 0.
6
million, or 1.0%, in additional meeting attendances and 1.3 million, or
1.4%, in additional
p
aid weeks
.
F
or the 52 weeks of fiscal 2009 net revenues were
$
1,398.9 million, a decrease of 8.9%, versus the
p
rior
y
ear of
5
3 weeks. After adjusting fiscal 2008 revenues for the UK VAT ruling, net revenues for fiscal 2009 of
$
1,398.9 million, declined
$
155.6 million, or 10.0%, from
$
1,554.5 million for fiscal 2008. The largest
component of this decline in revenues in fiscal 2009 versus the prior year was the unfavorable impact of foreig
n
currency exchange rates, which reduced our revenues by
$
63.9 million, or 4.1%. In fiscal 2009, the averag
e
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