WeightWatchers 2013 Annual Report Download - page 68

The following table sets forth a reconciliation for fiscal 2012 of certain selected financial data:
(in millions, except per share amounts)
Gross
Profit
Gross
Profit
Margin
Operating
Income
Operating
Income
Margin
Interest
Expense Net Income
Diluted
EPS
Fiscal 2012 ...................... $1,093.8 59.5% $510.8 27.8% $90.5 $257.4 $ 4.23
Adjustments to Reported Amounts(1)
UK self-employment accrual
reversal(1) .................. (14.5) (14.5) (7.1) (4.1) (0.07)
Total Adjustments ......... (14.5) (14.5) (7.1) (4.1) (0.07)
Fiscal 2012, as adjusted(1) .......... $1,079.3 58.7% $496.3 27.0% $83.4 $253.3 $ 4.16
Note: Totals may not sum due to rounding
(1) “As adjusted” is a non-GAAP financial measure that adjusts the consolidated statements of net income for fiscal 2012 to exclude the
impact of a $14.5 million decrease to cost of revenues and the $7.1 million increase to interest expense related to the settlement of the
UK self-employment matter .
See “Non-GAAP Financial Measures” above for an explanation of our use of non-GAAP financial measures.
Consolidated Results
Revenues
Net revenues were $1,839.4 million in fiscal 2012, as compared to $1,832.5 million in fiscal 2011.
Excluding the impact of foreign currency, which negatively impacted our revenues for fiscal 2012 by $24.1
million, net revenues in fiscal 2012 grew 1.7% versus the prior year. Revenue growth in fiscal 2012 was driven
primarily by WeightWatchers.com which benefited from a higher active Online subscriber base at the start of
fiscal 2012 as compared to fiscal 2011 and effective marketing in fiscal 2012. Our Continental European
meetings business, which benefited from new marketing strategies, also contributed to revenue growth on a
constant currency basis. This revenue growth in our Continental European meetings business was more than
offset by revenue declines in the NACO and UK meetings businesses as they cycled against the momentum of
their new program innovations and stronger and more effective marketing and public relations efforts in fiscal
2011. In addition, in fiscal 2012, meeting revenues were negatively impacted by the execution challenges
associated with introducing the Monthly Pass commitment plan to NACO’s small accounts portion of its
corporate business in the first half of fiscal 2012, as well as by macro-economic factors, particularly consumer
confidence, in NACO and the United Kingdom.
The combination of the above factors also led to a 5.4% decline in global meeting paid weeks in fiscal 2012
versus the prior year. However, with the benefits of starting the fiscal year with a higher active Online subscriber
base and effective marketing, WeightWatchers.com experienced growth of 26.7% in Online paid weeks, as well
as an 18.0% increase in end of period active Online subscribers, in fiscal 2012 versus the prior year. The increase
in Online paid weeks more than offset the decline in meeting paid weeks, which resulted in a 9.3% increase in
global paid weeks in fiscal 2012 versus the prior year. Global attendance in fiscal 2012 declined 11.0% in
comparison to fiscal 2011.
Gross Profit and Operating Income
Gross profit for fiscal 2012 of $1,093.8 million increased $35.3 million, or 3.3%, from $1,058.5 million in
fiscal 2011. Excluding the impact of the settlement of the UK self-employment matter noted in the above table,
and of foreign currency which negatively impacted gross profit for fiscal 2012 by $13.8 million, gross profit in
fiscal 2012 increased by $34.6 million, or 3.3%, versus the prior year. Operating income for fiscal 2012 was
$510.8 million, a decrease of $35.5 million, or 6.5%, from $546.3 million in fiscal 2011. Excluding the impact of
the settlement of the UK self-employment matter, and of foreign currency which negatively impacted operating
income for fiscal 2012 by $7.2 million, operating income in fiscal 2012 decreased by $42.9 million, or 7.9%,
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