Exhibit 99.1
Contact Information: |
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Investors: |
| Media: |
Weight Watchers International, Inc. |
| Brainerd Communicators, Inc. |
John Sweeney, CFA |
| Joseph LoBello |
Director of Investor Relations / Financial Analysis |
| (212) 986-6667 |
(516) 390-1526 |
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Brainerd Communicators, Inc. |
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John Buckley |
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(212) 986-6667 |
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WEIGHT WATCHERS ANNOUNCES THIRD QUARTER 2004 RESULTS
WOODBURY, N.Y., November 3, 2004 — Weight Watchers International, Inc. (NYSE: WTW) today announced results for the third quarter ended October 2, 2004.
Weight Watchers International, Inc., Consolidated
For the third quarter of 2004, net revenues increased 13.1% to $245.9 million. Net income was $50.2 million, up from $11.5 million in the third quarter of 2003. Fully-diluted earnings per share were $0.47 versus $0.10 in the prior year period.
For the first nine months of 2004, net revenues increased 8.8% to $792.2 million. Net income increased by 32.2% to $139.9 million from $105.8 million in the first nine months of 2003. Fully-diluted earnings per share were $1.30 versus $0.96 in the first nine months of 2003.
This quarter’s financials include the results of WeightWatchers.com, Inc., our affiliate and licensee, as required by the adoption of FASB’s Interpretation, FIN 46R, Consolidation of Variable Interest Entities. Accordingly, we are providing financial results both on a consolidated basis and excluding the impact of the consolidation of WeightWatchers.com, Inc.
Weight Watchers International, Inc., Results Excluding FIN 46R Impact of Consolidation and Early Extinguishment of Debt.
Weight Watchers International, Inc.’s third quarter 2004 net revenues increased 3.6% to $225.3 million. Net income was $48.5 million, up from $41.7 million in the prior year period. Fully-diluted earnings per share were $0.45 versus $0.38 in the year ago period. For the third quarter of 2004, earnings per share include a $0.05 benefit from the reversal of an income tax reserve associated with the buy-out of the Company from Heinz in September 1999.
For the first nine months of 2004, net revenues were $751.5 million, net income was $148.4 million and fully-diluted earnings per share were $1.38. Excluding the impact of the early extinguishment of debt from the first nine months of 2003, fully-diluted earnings per share were $1.24.
Reconciliation of Consolidated (GAAP) Results to Weight Watchers International, Inc., (excl. FIN 46R and Early Extinguishment of Debt) Results.
In the third quarter and nine months ended October 2, 2004, earnings per share were reduced by $0.01 and $0.03, respectively, due to refinancing activity including the early retirement of the Company’s senior subordinated notes. This compares to a charge of $0.28 related to the early extinguishment of debt, net of hedges, in the third quarter of 2003.
The 2004 consolidation of WeightWatchers.com added $0.02 to fully-diluted earnings per share in the third quarter and reduced earnings per share by $0.05 in the nine months ending October 2, 2004.
Commenting on the Company’s results, President and Chief Executive Officer Linda Huett, said, “We are pleased with the growing consumer response to our North American program innovation. While off to a slower start than expected, we believe that the new program is laying the foundation in NACO for future growth. Our international operations continue to perform well.”
The Company announced that it expects to finish the year with earnings of $1.69 to $1.71 per fully diluted share excluding costs associated with the early extinguishment of debt and the impact of FIN 46R.
Third Quarter Conference Call
The Company has scheduled a conference call today at 5:00 p.m. ET. During the conference call, Linda A. Huett, President and CEO, and Ann M. Sardini, CFO, will discuss third-quarter results and answer questions from the investment community. Live audio of the conference call will be webcast at http://www.weightwatchersinternational.com.
About Weight Watchers International, Inc.
Weight Watchers International, Inc. is the world’s leading provider of weight loss services, operating in 30 countries through a network of company-owned and franchise operations. Weight Watchers holds over 46,000 weekly meetings where members receive group support and education about healthy eating patterns, behavior modification and physical activity. In addition, Weight Watchers offers a wide range of products, publications and programs for those interested in weight loss and weight control.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations and beliefs, as well as a number of assumptions concerning future events. These statements are subject to risks, uncertainties, assumptions and other important factors. Readers are cautioned not to put undue reliance on such forward-looking statements because actual results may vary materially from those expressed or implied. The reports filed by the company pursuant to United States securities laws contain discussions of these risks and uncertainties. Weight Watchers International assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. Readers are advised to review our filings with the United States Securities and Exchange Commission (which are available from the SEC’s EDGAR database at http://www.sec.gov, at various SEC reference facilities in the United States and via the company’s website at http://www.weightwatchersinternational.com).
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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
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| October 2, |
| January 3, |
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| 2004 |
| 2004 |
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ASSETS |
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Current assets |
| $ | 113.6 |
| $ | 114.8 |
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Property and equipment, net |
| 17.2 |
| 15.7 |
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Goodwill, franchise rights and other intangible assets, net |
| 586.2 |
| 522.6 |
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Deferred income taxes |
| 86.3 |
| 110.6 |
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Deferred financing costs, other |
| 6.5 |
| 7.0 |
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TOTAL ASSETS |
| $ | 809.8 |
| $ | 770.7 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities |
| $ | 149.4 |
| $ | 134.4 |
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Long-term debt and other |
| 456.5 |
| 455.1 |
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TOTAL LIABILITIES |
| 605.9 |
| 589.5 |
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Shareholders’ equity |
| 203.9 |
| 181.2 |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
| $ | 809.8 |
| $ | 770.7 |
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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
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| Three Month Results |
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| Consolidated |
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| WWI |
| WWI |
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| October 2, |
| Less Impact |
| October 2, |
| September 27, |
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| 2004 |
| of FIN 46R |
| 2004 |
| 2003 |
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Revenues, net |
| $ | 245.9 |
| $ | 20.6 |
| $ | 225.3 |
| $ | 217.5 |
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Cost of revenues |
| 120.6 |
| 6.6 |
| 114.0 |
| 107.3 |
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Gross profit |
| 125.3 |
| 14.0 |
| 111.3 |
| 110.2 |
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Marketing expenses |
| 26.5 |
| 5.2 |
| 21.3 |
| 18.2 |
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Selling, general and administrative expenses |
| 25.0 |
| 2.6 |
| 22.4 |
| 18.0 |
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Operating income |
| 73.8 |
| 6.2 |
| 67.6 |
| 74.0 |
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Interest expense, net |
| 4.4 |
| 0.8 |
| 3.6 |
| 8.0 |
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Other (income) / expense, net |
| (0.2 | ) | 4.9 |
| (5.1 | ) | 0.9 |
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Early extinguishment of debt |
| 1.0 |
| - |
| 1.0 |
| 47.4 |
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Income before income taxes |
| 68.6 |
| 0.5 |
| 68.1 |
| 17.7 |
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Provision for income taxes |
| 18.4 |
| (1.9 | ) | 20.3 |
| 6.2 |
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Net income |
| $ | 50.2 |
| $ | 2.4 |
| $ | 47.8 |
| $ | 11.5 |
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Earnings Per Share: |
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Basic |
| $ | 0.48 |
| $ | 0.02 |
| $ | 0.46 |
| $ | 0.11 |
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Diluted |
| $ | 0.47 |
| $ | 0.02 |
| $ | 0.45 |
| $ | 0.10 |
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Weighted average common shares outstanding: |
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Basic |
| 104.4 |
| 104.4 |
| 104.4 |
| 106.9 |
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Diluted |
| 106.7 |
| 106.7 |
| 106.7 |
| 109.8 |
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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Nine Month Results
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| Nine Month Results |
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| Consolidated |
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| WWI |
| WWI |
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| October 2, |
| Less Impact |
| October 2, |
| September 27, |
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| 2004 |
| of FIN 46R |
| 2004 |
| 2003 |
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Revenues, net |
| $ | 792.2 |
| $ | 40.7 |
| $ | 751.5 |
| $ | 727.8 |
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Cost of revenues |
| 374.7 |
| 13.1 |
| 361.6 |
| 336.7 |
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Gross profit |
| 417.5 |
| 27.6 |
| 389.9 |
| 391.1 |
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Marketing expenses |
| 105.1 |
| 11.1 |
| 94.0 |
| 85.5 |
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Selling, general and administrative expenses |
| 69.4 |
| 5.8 |
| 63.6 |
| 54.5 |
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Operating income |
| 243.0 |
| 10.7 |
| 232.3 |
| 251.1 |
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Interest expense, net |
| 12.7 |
| 1.6 |
| 11.1 |
| 28.9 |
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Other (income) / expense, net |
| (3.7 | ) | 4.9 |
| (8.6 | ) | 3.2 |
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Early extinguishment of debt |
| 4.3 |
| - |
| 4.3 |
| 47.4 |
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Income before income taxes and cumulative effect of accounting change |
| 229.7 |
| 4.2 |
| 225.5 |
| 171.6 |
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Provision for income taxes |
| 77.9 |
| (1.8 | ) | 79.7 |
| 65.8 |
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Income before cumulative effect of accounting change |
| 151.8 |
| 6.0 |
| 145.8 |
| 105.8 |
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Cumulative effect of accounting change, net of tax |
| (11.9 | ) | (11.9 | ) | - |
| - |
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Net income |
| $ | 139.9 |
| $ | (5.9 | ) | $ | 145.8 | �� | $ | 105.8 |
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Basic Earnings Per Share: |
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Income before cumulative effect of accounting change |
| $ | 1.44 |
| $ | 0.06 |
| $ | 1.38 |
| $ | 0.99 |
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Cumulative effect of accounting change |
| (0.11 | ) | (0.11 | ) | - |
| - |
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Net income |
| $ | 1.33 |
| $ | (0.05 | ) | $ | 1.38 |
| $ | 0.99 |
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Diluted Earnings Per Share: |
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Income before cumulative effect of accounting change |
| $ | 1.41 |
| $ | 0.06 |
| $ | 1.35 |
| $ | 0.96 |
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Cumulative effect of accounting change |
| (0.11 | ) | (0.11 | ) | - |
| - |
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Net income |
| $ | 1.30 |
| $ | (0.05 | ) | $ | 1.35 |
| $ | 0.96 |
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Weighted average common shares outstanding: |
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Basic |
| 105.3 |
| 105.3 |
| 105.3 |
| 106.7 |
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Diluted |
| 107.7 |
| 107.7 |
| 107.7 |
| 109.8 |
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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
OPERATIONAL STATISTICS
(IN MILLIONS)
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| Three Month Results |
| Nine Month Results |
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| Oct 2, 2004 |
| Sep 27, 2003 |
| Oct 2, 2004 |
| Sep 27, 2003 |
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Attendance |
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North America |
| 7.4 |
| 8.3 |
| 25.6 |
| 26.8 |
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International |
| 6.3 |
| 6.0 |
| 21.7 |
| 20.4 |
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Total Attendance |
| 13.8 |
| 14.2 |
| 47.2 |
| 47.2 |
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Supplemental Attendance Detail |
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UK |
| 3.0 |
| 3.1 |
| 10.4 |
| 10.2 |
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CE |
| 2.5 |
| 2.1 |
| 8.6 |
| 7.6 |
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Other |
| 0.8 |
| 0.8 |
| 2.7 |
| 2.6 |
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Total International Attendance |
| 6.3 |
| 6.0 |
| 21.7 |
| 20.4 |
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North America |
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Meeting Fees |
| 85.4 |
| 93.9 |
| 288.6 |
| 300.1 |
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Product Sales |
| 35.8 |
| 37.0 |
| 111.8 |
| 126.3 |
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Total |
| 121.2 |
| 130.9 |
| 400.4 |
| 426.4 |
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International |
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Meeting fees |
| 57.9 |
| 47.5 |
| 197.2 |
| 163.4 |
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Product Sales |
| 31.5 |
| 26.9 |
| 109.3 |
| 94.3 |
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Total |
| 89.4 |
| 74.4 |
| 306.4 |
| 257.7 |
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Total WWI Sales |
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Meeting Fees |
| 143.3 |
| 141.4 |
| 485.7 |
| 463.6 |
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Product Sales |
| 67.3 |
| 64.0 |
| 221.1 |
| 220.6 |
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Domestic Franchise Commissions |
| 2.9 |
| 3.9 |
| 10.3 |
| 15.4 |
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Foreign Franchise Commissions |
| 1.4 |
| 1.4 |
| 5.0 |
| 4.8 |
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All Other |
| 10.4 |
| 6.9 |
| 29.5 |
| 23.5 |
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Total WWI Sales |
| 225.3 |
| 217.5 |
| 751.5 |
| 727.8 |
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Note: Totals may not sum due to rounding. Figures are rounded to the nearest one hundred thousand;
percentage changes are based on rounded figures except for attendance percentage changes which are based
on rounded figures to the nearest thousand.