Good evening, ladies and gentlemen, and welcome to the Weight Watchers International first quarter 2010 earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session, and instructions will be provided at that time. As a reminder, this conference call is being recorded today, May 6, 2010. At this time, I’d like to turn the call over to Ms. Sarika Sahni of Weight Watchers International. Please go ahead.

Thank you. And thank you to everyone for joining us today for Weight Watchers International’s first quarter 2010 conference call. With us on the call are David Kirchhoff, President and Chief Executive Officer, and Ann Sardini, Chief Financial Officer. At about 4:15 P.M. Eastern Time today, the company issued a press release today reporting its fiscal results for the first quarter 2010. The purpose of this call is to provide investors with some further details regarding the company’s financial results as well as to provide a general update on the company’s progress. The press release is available at www.weightwatchersinternational.com. Before we begin, let me remind everyone that this call will contain forward-looking statements. Investors should be aware that any forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company’s filings with the Securities and Exchange Commission. The company does not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. I would now like to turn the call over to Mr. Kirchhoff. Please go ahead, David.

Good afternoon and thank you for joining us, as we review Weight Watchers International’s performance for the first quarter of fiscal year 2010. Consistent with the direction we gave in the last earnings call, Q1 2010 proved to be one of the more challenging quarters at Weight Watchers has faced. The combination of residual slowness in the economy, unprecedented bad weather in our largest market, and comping against the new program launch last year in our US and UK markets created uniquely difficult operating conditions. As a result, we experienced soft enrollments in our business in both our key US and UK markets, only partially offset by the successful launch of our new ProPoints program in Continental Europe and a continued growth of our global WeightWatchers.com business. As we will discuss later in this call, the early results of Q2 look significantly more favorable. Before I run through those specific quarterly results, I want to point out that we have modified our approach to our earnings press release to more clearly bridge between our GAAP and non-GAAP financial results, as well as other key metrics. I will focus my remarks on the financial and operating metrics that provide comparability and insight into the performance of our business. I hope you find this new approach helpful. On a constant currency basis, Q1 revenues declined 4.5% with meeting fees declining 7%, product sales and other revenues declining 6%, and Internet revenues growing 11%. From a volume perspective, combined global online and meetings paid weeks grew by about 1%. Global paid weeks in our meetings were down 4% versus the prior year quarter while paid weeks for Weight Watchers online were up a solid 11%. Q1 2010 EPS was $0.58 compared to $0.61 for the same period in 2009. After adjusting for the…

Thank you, David. And good afternoon, everyone. Recapping our first quarter 2010 as reported results, before adjustments for comparability, consolidated company revenues of $388 million were slightly behind prior year, decreasing by 0.7%. Operating income of $91.4 million declined 2.6%, while net income of $44.6 million was 5.8% below the Q1 2009 level. And EPS was $0.58 versus $0.61 in last year’s first quarter. We have adjusted couple of items related to expense in the first quarter of last year, which should be adjusted for comparability. The first of these is a restructuring charge taken in last year’s first quarter associated with a reduction in force. Removing this charge from 2009 reduces expense by $3.1 million and increases 2009 Q1 EPS by $0.02. The second adjustment relates to the adverse court ruling issued earlier this year with regard to leader self-employment status in the UK. This resulted in a current and prior period charge to fourth quarter 2009 results and has an ongoing impact. In the first quarter of 2010, this charge was $1.1 million. Adjusting the first quarter 2009 for comparability results in a similar charge, which reduces Q1 ’09 EPS of $0.01. After adjusting for both of these items, 2009 Q1 EPS was $0.63 and 2010 Q1 EPS was $0.58, $0.05 below the comparable prior year level, with higher interest expense accounting for $0.02 of the difference. Q1 2010 revenues benefited by $15.2 million from favorable foreign currency translation. Excluding that benefit, revenues decreased by 4.5% versus the prior year level, with the impact of volume softness in the NACO and UK meeting businesses, partially offset by revenue increases in Continental European meetings and global online. Our net income on a constant currency basis after factoring in the 2009 adjustments was 10.9% below the 2009 Q1 level. In…

Thank you, Ann. Having completed the challenging first quarter of 2010, we are feeling somewhat more optimistic about our volume prospects for the duration of the year, particularly in NACO and WeightWatchers.com. Economic conditions certainly appear to be improving and the very early results of our spring campaigns in the US are encouraging. The spring campaign launch was so early, is an indication of PR and advertising, can have a positive impact in checking our enrollment trends. In CE, we’ve demonstrated that we can change our trajectory by our program offering. While it is not easy to accurately predict how long the benefit from a new marketing campaign or program innovation will last, it is an important demonstration that our future destiny is under our control and can be driven by the actions we’ve taken. Going forward, we are focused on all the leverage we have available to us as we begin to turn around some of the negative volume trends we have experienced. With that in mind, we are even more excited about our strategy of innovating our programs, transforming our retail infrastructure, and innovating our service offering. Along those lines, we are continuing to make strong progress as we prepare for 2011. Let me provide a quick update on the status of these initiatives. As noted on the February call, we are working to ready our new program for soft launch in late Q4 in the US, UK, Australasia and Canada, with a full marketing push in January 2011, NACO’s retail transformation. We are continuing to make good progress in preparing for a full rollout commencing this fall. Specifically, we now have a center design that will effectively accomplish our goals of having centers that one, improve street side signs in front of store appeal; two, provide a…

Thank you. (Operator instructions) Our first question is from Jerry Herman from Stifel Nicolaus. Go ahead. Jerry Herman – Stifel Nicolaus: You didn’t want to attempt it, I guess. Hi, guys. How you doing? First question is with regard to sort of 2011 and the innovation in particular. David, I’m wondering if you can – I know you don't want to talk about the specifics of the innovation, but can you help us with regard to how much of a proxy ProPoints in Continental Europe is serving for you guys, and if you can expect a similar or better or less volume influence relative to Continental Europe.

If you think about the elements that we described of the ProPoints plan in Europe on the last call, some of the things we talked about was the fact that we were updating the formula based on advancements in nutritional science for the past 10 to 12 years that we were driving towards a plan that does an even better job of integrating health directly into the plan in terms of better-for-you healthy choices. And so I think the applicability of those types of learnings and trends to our English-speaking markets are absolutely valid and important. The approach we take in program innovations is we work very hard to have – if the US and UK do an innovation one year, CE looks to sort of take everything that works really well with that innovation, it can build on it and take it to a new level. And we would certainly be hoping to in the case of the English-speaking market, now that they are up a bit, they will be looking to take what Continental Europe did and try to further up that. And so our programs absolutely build on each other, but they also look to improve with each successive version. Jerry Herman – Stifel Nicolaus: Okay. And maybe you can just help us with regard to the economic read and, in particular, paid weeks and the retention in that program. And in the past, you’ve talked a little bit about consumer credit and what sort of influence that has had on that model, which obviously uses credit cards.

Are you talking about monthly pass –? Jerry Herman – Stifel Nicolaus: Yes, absolutely.

Okay. I think what’s been gratifying on actually a number of different dimensions is, as we discussed and have been discussing over the past year-and-a-half, particularly going into the recession, we were concerned about some of the things that you talked about with credit card defaults and impacts of the economy and sort of credit lines being pulled back, might have on the consumer, and a knock on the fact that that could potentially have with monthly pass. Frankly, the good news is that we just haven’t seen any evidence of that happen at all. And I say that because what we’ve been seeing pretty consistently is some very nice increases in monthly pass penetrations as a percentage of our total mix, for example, in North America, really up pretty significantly Q1 ’09 versus Q1 ’10. And furthermore, what we’ve been able to do is we continue to sort of have nice incremental improvements in terms of monthly pass retention. And so to the extent that the consumer has been pressured, I think that the actions that we’ve been taking have been more than enough to compensate for that. So the matter of fact of the consumer credit issues has not been present in our business so far. Jerry Herman – Stifel Nicolaus: Okay, great. And just one quick one for Ann. You were helpful in your guidance with regard to interest expense for the full year. Can you talk a little bit about the average interest rate and the sensitivity to the expense relative to changes in interest rates generally?

We are hedged significantly. $1.3 billion of the debt is hedged at this point. So we are not terribly sensitive to LIBOR right now. Jerry Herman – Stifel Nicolaus: Okay, great.

This is one more information on the interest rates. Jerry Herman – Stifel Nicolaus: I guess in the past you have offered the average interest rate on the debt. Again, that's probably a little less important, but –

Yes. We’re looking at in the neighborhood of 5% of these in the year. Jerry Herman – Stifel Nicolaus: Okay. Great. Thanks, guys. I'll turn it over.

Thanks.

Thank you. Our next question is from Chris Ferrara from Bank of America. You may go ahead. Chris Ferrara – Bank of America: Hey, guys. Dave, you said the trends I guess in North America going into the second quarter and the spring campaign looked a lot better. And I understand you want to take it all in stride and be conservative about it, but it sounds like you are guiding, maybe I got this one, attendance down kind of mid-double digits still. Is that right? And I guess why doesn't any of this improvement you see at all kind of translate into the attendance outlook, especially if weather is not going to be as bad, comps are getting easier, stuff like that?

Chris, you’re right. I mean, we want to be conservative for a number of reasons. And then let me also get back to the attendance map, if you will, in terms of it being a lighting indicator of enrollments. But first off, in terms of being conservative in the forecast, our view is that we have sort of five weeks that we are really excited about. But it’s only five weeks. We’re going to be running this campaign actively right up until about Memorial Day, and then as we know, as we (inaudible) we tend to go dark for a period of time. I can’t tell you exactly how those sorts of follow-on effects is going to be during those periods, nor can I forecast what the fall is going to look like. And so because I don’t know the lasting impact in the sort of ongoing impact that this approach is going to take, I have no reason to sort of doubt its viability and its validity. But because I don’t have kind of visibility and sort of actually seeing the data, our nature is to just be conservative in the way that we are looking at it and that is sort of factored into some of the sort of rest of your trend as we were suggesting in terms of a forecast for NACO. The other thing I would suggest is that if you look at the challenge of 2010 specifically and you look at the impact of a really soft enrollment numbers and the all important winter campaign is that what that has attended, what that does is it basically builds up a deficit via installed base that sort of beginning in Q2 of this year. And so it kind of creates a hole, which effectively was…

You know what’s funny, Chris, is that we actually look at it in a very different way. And this was, to us, a realization and almost – not an epiphany, but it makes – it's kind of a little bit too dramatic. But we have this experience where we felt like we have just finally gotten to the point this January with over so much noise in the market, that somehow we were being missed in the conversation. And when I say the conversation, I mean the conversations that happen every day with people who are talking about the need and desire to lose weight ensuring tips and ideas on how they are going to approach it. And we had those nagging feeling we weren’t being part of it. What was frustrating for us is that we by far more than any other organization have strong word of mouth. We have people all over the place that are speaking and passionate advocates for the approach, the lifestyle and the sustainable approach that we pay toward weight loss. And I think that, to us, kind of the clue in was developing a marketing campaign that directly harness that word of mouth and did it in a way that if you want to think about it, pardon the buzzword, but it’s almost crowd sourcing our advertising and our messages in a way that amplifies what was happening in nature. And so we actually think the beauty of the approach that we can take that other people can’t is we can basically take word of mouth, advertising and PR and then think of them as sort of three points on a triangle that’s sort of work and reinforce each other in a consistent set of messages in a way that nobody else can do. And I think that the upside of that is, is that it comes across as a message that is fundamentally different from what you are going to see from, I believe in my own prejudice way, some of my competitors, and that we are going to have a message that is most importantly authentic. Chris Ferrara – Bank of America: :

Absolutely not. It is very much a focus for us. I mean – and it is clearly a focus for the licensing team, and they are working hard against it. I think that – and it is consistent with Ann’s comments. There is – I think there has been some misunderstanding about the licensing category that relates to some of the product lines that we carry. But if I look at our licensing portfolio, I think of it in sort of two dimensions. One is the dimension of some situations that I truly do believe was somewhat unique such as the change in the Applebee’s relationship, which was a function of new ownership and new management, and different strategic priorities on their part. Some sort of complications in the relationship which had to do us a change of ownership that we believe is ultimately addressable in kind of the uniqueness of a relationship in soup which had much more to do with just the timing of when a bunch of new SKUs came on in inventory stocking this time last year as opposed to this year. If I look at the other aspect of licensing category, the truth is that the better-for-you category, if you see sort of across the board, has been a bit of a victim in a recessionary environment. I believe it’s a victim on two dimensions. One, better-for-you products do tend to carry a bit of a price premium and this hasn’t exactly been the best grocery market to have premium priced products. And two, this has been an environment with all this anxiety around a recession that I believe has lent itself to sort of the opposite, which is comfort eating. And so for example, when I look at kind of the frozen diet entrée category, your Lean Cuisines, Healthy Choice, Smart Ones, if I look at that combined category, it was down about 7% in 2009 and down about 4% in 2010. And I absolutely believe that that category is, there is no doubt in my mind that’s going to get a second win, because the consumers still need to start making better choices. And so the opportunity for us to capitalize on that when the consumer does start making better choices and they do start returning better-for-you foods and then to make sure that we have the right license fees lined up. Both were building against the stable business we have as well as continuing our process and seeking new relationships. Chris Ferrara – Bank of America: But that new relationship seeking process, I mean, how is that going? I mean, building –

You know, I think it’s one of these things where we would always like it to go faster, and I think we can look for opportunities to make it go faster. But at the same time, we’ve had some nice wins, getting out of the gates in January with Kraft, with Bocca Burgers and Jell-O on an endorsement deal that has been really successful so far. Green Giant is a relatively new endorsement program for us. And so particularly on the endorsement front, we’ve had some good successes, and I believe this is a place where frankly success breeds success as we continue to build good case studies. I think we’re only going to do better in that category. And so I really do dispute the notion that that Weight Watchers presence in retail in any way, shape or form will diminish over time. One of my proof points for that is that if I look, for example, at the UK, which has the same sort of recessionary environment and some of the same pressures on grocery retail, their licensing business is up again this year. And so I think that some of the notions in terms of grocery dynamics, I’m just not sure it’s true. I really do believe that much of what we’re seeing in this category is a function of the recession in the premium prices. And that will pass over time. Chris Ferrara – Bank of America: Great. Thanks for all the time. Sorry to take up so much.

No problem.

Thank you. (Operator instructions) There are no further questions registered. I’d like to turn the meeting back to the presenters.

Thank you for joining us today and I look forward to speaking with you again at our next quarterly earnings release.