WeightWatchers 2015 Annual Report Download - page 45

Fiscal 2016: Anticipated Business Metrics, Trends and Other Events
We expect that our fiscal 2016 revenues will increase as compared to fiscal 2015, driven by anticipated
recruitments that will establish a strong foundation for revenue growth and increased profitability in fiscal 2016.
Given the nature of our subscription-based payment model, revenue growth typically lags recruitment growth.
We expect an increase in revenues despite the approximately $20.0 million negative impact of the lower fiscal
2016 Incoming Active Base versus the prior year and an anticipated $16.0 million negative impact of foreign
currency on fiscal 2016 revenues based on current rates. We plan to use cash on hand to repay in full our
$144.3 million debt obligations due April 2016 under the WWI Credit Facilities.
Non-GAAP Financial Measures
To supplement our consolidated results presented in accordance with accounting principles generally
accepted in the United States, or GAAP, we have disclosed non-GAAP financial measures of operating results
that exclude or adjust certain items. Gross profit and gross profit margin, operating income and operating
income margin, net income attributable to the Company, selling, general and administrative expenses and
earnings per fully diluted share, including components thereof, are discussed in this Annual Report on Form
10-K both as reported (on a GAAP basis) and as adjusted (on a non-GAAP basis), as applicable, as follows:
(i) with respect to fiscal 2015 and 2014 to exclude the impact of charges associated with our previously
disclosed plans to restructure our organization; (ii) with respect to fiscal 2015 to exclude the impact of
(a) expenses associated with the Winfrey Transaction and (b) the gains on early extinguishment of debt
associated with our previously reported debt prepayments in the period; (iii) with respect to fiscal 2014 to
exclude the impact of (a) the net tax benefit related to an intercompany loan write-off in connection with the
closure of our China business and the establishment of a valuation allowance related to tax benefits for foreign
losses that are not expected to be realized and (b) the gain recognized in connection with our previously
disclosed Brazil acquisition due to an adjustment of our previously held equity interest to fair value offset by a
charge associated with the settlement of the royalty-free arrangement of the Brazil partnership; and (iv) with
respect to fiscal 2013 to exclude the early extinguishment of debt charge. Income before taxes, effective tax
rate, net income attributable to the Company and earnings per fully diluted share are discussed in this Annual
Report on Form 10-K both as reported (on a GAAP basis) and as adjusted (on a non-GAAP basis) to exclude
from fiscal 2013 the impact from the early extinguishment of debt charge recorded in connection with our
previously announced April 2, 2013 refinancing of our long-term debt. We generally refer to such non-GAAP
measures as excluding or adjusting for the impact of the expenses associated with the Winfrey Transaction, the
restructuring charges, the gain on the early extinguishment of debt, the gain on the Brazil acquisition, the
China tax benefit partially offset by the recognition of a valuation allowance and the early extinguishment of
debt charge. Our management believes these non-GAAP financial measures provide supplemental information
to investors regarding the performance of our business and are useful for period-over-period comparisons of
the performance of our business. While we believe that these financial measures are useful in evaluating our
business, this information should be considered as supplemental in nature and is not meant to be considered in
isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition,
these non-GAAP financial measures may not be the same as similarly entitled measures reported by other
companies.
Use of Constant Currency
As exchange rates are an important factor in understanding period-to-period comparisons, we believe in
certain cases the presentation of results on a constant currency basis in addition to reported results helps improve
investors’ ability to understand our operating results and evaluate our performance in comparison to prior
periods. Constant currency information compares results between periods as if exchange rates had remained
constant period-over-period. We use results on a constant currency basis as one measure to evaluate our
performance. In this Annual Report on Form 10-K, we calculate constant currency by calculating current-year
results using prior-year foreign currency exchange rates. We generally refer to such amounts calculated on a
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