NEW YORK, July 31 Weight Watchers International,Inc. (NYSE: WTW) today announced its results for the second quarter ended June28, 2008.
Second Quarter 2008 Results
For the second quarter of 2008, net revenues increased $13.7 million to$400.0 million, up from $386.3 million in the second quarter of 2007.Excluding charges resulting from the Company's recent U.K. VAT ruling, whichwere recorded as an offset to revenue, net revenues were up $46.2 million, or12%, versus the prior year period. In the second quarter of 2008, the Companyreceived an adverse ruling with respect to the imposition of U.K. value addedtax, or VAT, on Weight Watchers meeting fees collected since April 1, 2005.As a result of this ruling, the Company recorded incremental reserves as anoffset to revenue in the second quarter of 2008 for current and prior yearperiods in the aggregate amount of $32.5 million.
Net income for the second quarter of 2008 including the U.K. VAT chargeswas $46.6 million versus $58.0 million in the prior year period. Excludingthese charges, net income was $68.6 million, an increase of $10.6 million, or18%, versus the prior year period. Fully diluted earnings per share,including U.K. VAT charges of $0.28 per fully diluted share, were $0.59 in thesecond quarter of 2008. Excluding the U.K. VAT charges, fully dilutedearnings per share were $0.87, an increase of 19% versus $0.73 in the prioryear period.
First Half 2008 Results
In the first half of 2008, net revenues increased $51.3 million to$837.0 million, up from $785.7 million in the first half of 2007. Excludingthe U.K. VAT charges, net revenues were up $83.8 million, or 11%, versus$785.7 million in the first half of 2007. Net income for the first half of2008 including the U.K. VAT charges was $104.0 million versus $111.8 millionin the prior year period. Excluding these charges, net income was$126.0 million, an increase of $14.2 million, or 13%, versus the prior yearperiod.
Fully diluted earnings per share were $1.31 in the first half of 2008,including the U.K. VAT charges of $0.28 per fully diluted share. Excludingthese U.K. VAT charges and $0.02 per share of non-recurring expense associatedwith the early extinguishment of debt in the prior year period, fully dilutedearnings per share were $1.59 in the first half of 2008, an increase of 15%versus $1.38 per fully diluted share in the prior year period.
Commenting on results, David Kirchhoff, President and Chief ExecutiveOfficer of the Company, said, "Despite increasingly difficult economicconditions, our second quarter financial results were solid. I amparticularly pleased by the performance of our WeightWatchers.com businesswhich grew revenues by a robust 28% in the quarter."
The Company narrowed its full year 2008 earnings guidance range frombetween $2.85 to $3.00 per fully diluted share to between $2.85 and $2.96 perfully diluted share, excluding expense associated with the startup of itsChina joint venture and U.K. VAT charges resulting from the recent adverseruling.
The Company has scheduled a conference call today at 5:00 p.m. ET. Duringthe conference call, David Kirchhoff, President and Chief Executive Officer,and Ann Sardini, Chief Financial Officer, will discuss second quarter resultsand answer questions from the investment community. Live audio of theconference call will be simultaneously webcast over the Internet on theCompany's corporate website, www.weightwatchersinternational.com. A replay ofthe webcast will be available on this site for 30 days.
Statement regarding Non-GAAP Financial Measures
The following provides information regarding non-GAAP financial measuresused in this earnings release:
To supplement the Company's consolidated statement of operations presentedin accordance with accounting principles generally accepted in the UnitedStates, o