WeightWatchers 2011 Annual Report Download - page 60

Statements of Income as Reported and Adjusted
(In millions, except per share amounts)
Fiscal
2011
Fiscal
2010
Increase/
(Decrease)
%
Change
Revenues, net (as adjusted)(1) ............................... $1,819.2 $1,450.0 $369.2 25.5%
UK VAT ruling accrual reversal(1) ....................... — 2.0 (2.0)
Revenues, net of VAT ruling ................................ 1,819.2 1,452.0 367.2 25.3%
Cost of revenues ......................................... 772.0 661.4 110.6 16.7%
Gross Profit ..................................... 1,047.1 790.6 256.5 32.4%
Gross Margin % ................................. 57.6% 54.4%
Marketing expenses ....................................... 292.4 217.1 75.2 34.6%
Selling, general & administrative expenses .................... 208.5 183.2 25.3 13.8%
Operating income ................................ 546.3 390.3 156.0 40.0%
Operating Income Margin % ........................ 30.0% 26.9%
Interest expense .......................................... 59.9 76.2 (16.4) (21.5%)
Other expense (income), net ................................ 3.4 0.9 2.4 100.0%
Income before income taxes ........................ 483.1 313.2 170.1 54.3%
Provision for income taxes ................................. 178.7 120.7 58.1 48.1%
Net income ...................................... 304.3 192.5 111.8 58.1%
Net loss attributable to the noncontrolling interest ............... 0.5 1.7 (1.2) (69.5%)
Net income attributable to the Company ............... $ 304.9 $ 194.2 $110.6 57.0%
Weighted average diluted shares outstanding ................... 74.1 75.9 (1.7) (2.3%)
Diluted EPS ............................................. $ 4.11 $ 2.56 $ 1.55 60.7%
Note: Totals may not sum due to rounding
(1) “As adjusted” is a non-GAAP financial measure that adjusts the consolidated statements of income for fiscal
2010 to exclude the benefit of a $2.0 million increase to revenues from the reversal of an over-accrual
related to the adverse UK VAT ruling. See “Non-GAAP Financial Measures” above for an explanation of
our use of non-GAAP financial measures.
Consolidated Results
Our revenues increased by $367.2 million, from $1,452.0 million in fiscal 2010 to $1,819.2 million in fiscal
2011, an increase of 25.3%. As noted in the above table, fiscal 2010 results included a benefit to revenue of $2.0
million for a partial accrual reversal of a charge previously recorded in the second quarter of fiscal 2008. As
previously reported, this charge, which reduced revenues in fiscal 2008 for current and prior year periods, and
which has now been paid, was related to an adverse ruling the Company received with respect to the imposition
of UK VAT on meeting fees collected by our UK subsidiary. After adjusting for this charge, fiscal 2011 revenues
increased by $369.2 million, or 25.5%, versus the prior year.
Net income attributable to the Company for fiscal 2011 of $304.9 million increased by $110.6 million, or
57.0%, from $194.2 million in the prior year. On an adjusted basis, net income attributable to the Company
would have been $192.9 million for fiscal 2010 as compared to $304.9 million for fiscal 2011, an increase in
fiscal 2011 of $111.9 million, or 58.0%. Diluted earnings per share of $4.11 for fiscal 2011 increased by $1.55,
or 60.7%, from $2.56 in the prior year. Excluding the $0.02 benefit in fiscal 2010, earnings per fully diluted share
of $2.54 was $1.57, or 61.8%, below the $4.11 of diluted earnings per share in fiscal 2011. Included in the fiscal
2010 diluted earnings per share was a $0.05 charge associated with the previously disclosed settlement of a
California labor litigation.
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