Ladies and gentlemen, welcome to Weight Watchers International First Quarter 2012 Earnings Teleconference Call. During the presentation, all participants will be in a listen-only mode. Afterwards you’ll be invited to participate in the question-and-answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded today, May 2, 2012 At this time, I’d like to turn the call over to Lori Scherwin of Weight Watchers International. Please go ahead.

Thank you, operator, and thank you to everyone for joining us today for Weight Watchers International’s first quarter 2012 conference call. With us on the call is David Kirchhoff, President and Chief Executive Officer. At about 4 O’clock p.m. Eastern Time today the company issued a press release reporting its financial results for the first quarter of fiscal 2012. The purpose of this call is to provide investors with 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 on the company’s corporate website located at www.weightwatchersinternational.com. Reconciliations of non-GAAP measures disclosed on this conference call to the most directly comparable GAAP financial measure are also available as part of the press release. 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. Please refer to these filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements. All forward-looking statements are made as of today and except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise. As you all know the company is in the process of conducting a search for a new CFO, which we will update you on at the appropriate time. Consequently for this call, Steve’s remark will also come at the financial section of the company’s result. I would now like to turn this call over to David. Please go ahead.

Good afternoon. And thank you for joining for us as we review Weight Watchers International’s performance for the first quarter of fiscal 2012. As you may recall, Q1 2011 was an outstanding quarter, with paid weeks growth of 72% in our online business and 23% in our meetings business. In Q1 this year, I’m gratified that consumer engagement with the Weight Watchers brand continued to increase with global combined paid weeks up 12% over last years historically high watermark. Despite 72% growth in online paid weeks last year, we were able to grow paid weeks by another 35% in Q1 2012, by investing and marketing behind the online business, specifically against growth opportunities with men in the international markets. On the meetings business, we believe the key driver of long-term growth will be to embed Weight Watchers more directly in the healthcare system. The potential of this opportunity is clearly demonstrated by the fact that Weight Watchers penetration is an order magnitude higher where meetings are partially or fully subsidized as oppose to being fully paid by the consumer. We’re already seeing the clear benefits of this approach among some of our large corporate accounts that provide subsidies. As part of our healthcare focused efforts, we rolled out Monthly Pass to our corporate accounts in North America in Q1 2012. Unfortunately this roll out created execution issues with our North American small account corporate business, which negatively impacted our results. These execution issues combined with a disappointing advertising campaign in the UK resulted in 5% decline in paid weeks for our global meeting business in Q1 202 versus the prior year period. Let me get into some more specifics on our Q1 2012 performance. On a constant currency basis Q1 2012 revenues were flat at plus 0.5% over the prior…

(Operator Instructions) Our first question is Chris Ferrara of Bank of America. Please go ahead. Christopher Ferrara – Bank of America/Merrill Lynch: Hey, thanks. I guess first of all, are you still sticking with the 30% to 35% paid weeks growth on the .com business, because it sounded – in the thesis you gave it sounded like that might not be the case anymore?

We’re definitely looking for 30% for Q2 in that range. and we think that we should have good momentum going into the second half. and I kind of want to see the sort of the full results of the spring campaign come in. So, let me provide a little bit of additional guidance once we get into our Q2 call. Christopher Ferrara – Bank of America/Merrill Lynch: But 30% to 35% for the year, you don’t necessarily feel good about it at this point?

No, because actually if you think about it, we started the Q1 with 35% or 30%. and so 30% for the year actually should be, 30%, 35% should actually be still reasonable in striking distance. Christopher Ferrara – Bank of America/Merrill Lynch: Okay, okay. And then I guess gross margin and I know you gave some put and takes. The mix benefit alone should have you generating gross margin benefit year-on-year in the range of about 300 basis points or depending on how you cut the numbers, this quarter it’s only up 100, it looks like Q2, it’s like, I guess you can talk bigger picture, I mean do you expect there to be just in gross margin drags where the mix lift that’s going to be big part of the gross margin, so this is not really realistic any more of the long term, could you just I guess give a little more color on that.

The color I would give is that the mix lift towards the .com business you described is the way we dimensionalizing. The drag for this particular quarter was due to softer attendance at NACO, which in turn dropped our meeting averages, as well there was a little bit investment and some of the healthcare efforts ended up on the cost of goods line, as it’s some one-time expenses of retail roll outs. One of the things, if you kind of think about what we’ve done with the price increase in the beginning of the year as we took pretty much the most conservative approach we could have taken by grandfathering it. So what that meant was sort of maximal drag on enrollments, because it impacted everybody knew who would be enrolling, but we really didn’t get much benefit of it in the first quarter. So by way of example, I would estimate that if you’re looking at our NACO meeting fees roughly a third would be those on the higher price as opposed to those on the grandfathered price. What happens over the course of the quarter is that 33% continues to go steadily up as the year progresses and you have more and more people on the new price, which in turn becomes gross margin accretive, so what you end up with is the second half where you’re getting mixed benefit with the .com business, you should see stabilization in terms of average meeting size versus what we saw in Q1. And then finally you start getting the benefit of the higher pricing that really starts hitting its stride, as you get into the summer fall. And so those things in combination is what then causes gross margin to left back out. Christopher Ferrara – Bank of America/Merrill Lynch: Got it. and I guess this one last one, obviously the small business piece that had a big impact, but it’s more than bad. I mean there is some leakage else at the P&L. I guess can you talk a little bit about the visibility you have in the earning this time of year, especially in light of the fact that I mean just brought back a quarter at the company at $82. The stocks are going to be materially below that I was just wondering if you can comment on that a little and I’ll jump off.

Okay, so the visibility of the company if you look at the P&L, the aspects of the company where we have terrific visibility as on the volume line of retention, which continues to be [Roxell], so that’s very predictable. We have good predictability in terms of Monthly Pass mix. How we think pricing is going to be rolling in, we have good predictability and moreover going to be deploying marketing dollars, how G&A is going to come in, and we’ve got good visibility in terms of operating expense and cost of goods. Obviously, the one part of the business that it’s always the most difficult to forecast is the number of people enrolling in a given period of time. And so really, if you think about what we have is data points, right now as we have the benefit of Q1, which to your point, we knew it was going to a tough quarter and we knew it was a tough comparable, yet we have multiple self inflected wounds particularly at the small cap business, which is frustrating as well as the UK marketing, which is also frustrating, but nonetheless I think as we look out from a year going forward, the good news for us is that the impact of enrollments further out you get into the year has a diminishing impact in terms of the total financial results for the year, because greater portion, all the monthly income grew less portion of the membership mix going forward. So in other words, if you have variability in enrollment volumes say for example, in December it really doesn’t have a big impact in terms of overall financial performance, if you’re taking at the extreme. So, I think that as the year progresses we are getting increasing visibility into the business…

Thank you. Our next question is from Brian Wang of Barclays. Please go ahead. Brian Joseph Wang – Barclays Capital Inc.: Yeah, hi, thank you for taking the questions. I guess my first question is related to the retail, transformation or the relocations in remodeled stores, I guess if you could just talk a little bit about what you are seeing from the sales list, whether you are seeing, obviously it’s a little bit weak, so I guess could you just talk, how that batch of stores, I think – about 25% of the stores were done prior to the first quarter and to have those performed relative to I guess the group that was not done?

Sure, so let me first half dimensionalize the impact that those new store of things could have on our business. What I mean by that is we started the year with 25% of our systems being upgraded if you will. If you think about the attendances that happen to NACO about 55% of those flow through these retail centers so really if you take 25% or 55% you are taking 12% to 13% of the attendance space that was eligible for lift, if you will and so because we had a relatively lower starting base, it did not have the opportunity to have the aggregate impact on the business that we would have like to have seen. That was one of the things that we are hoping to kind of have in our back pocket or winning our sales if you will, going into this year, but it’s just too many things with local regulations and permitting and everything else that they just we weren’t able quite get to that 50% target that the goal that we set for ourselves. In terms of measuring lift we are now getting into a period where it’s getting harder to do, when we first measure lift we were doing it on control markets where we get a true apples-to-apples reading and remember it’s a little bit complicated by the fact that we have centers that are office run by traveling locations, that’s where we saw kind of full market by full market with 15% to 20% lift. What we are now seeing is that as leases come up, we are taking those opportunities to upgrade stores and so it’s substantially more difficult to isolate impact because there is a lot of other store network affects that are pretty hard to disentangle. What we…

Absolutely. Yeah, we did have a couple of things, which was at the portal, it wasn’t down very much. That was the lesser of the issues. Really the primary issue with the small accounts is, to put some more color around it, imagine you are with a small kind i.e., a single location, there is an employee who is a Weight Watchers member is excited about having Weight Watchers on campus. He or she would attempt to gather typically 20 other people at that location and get them on board at which point they would meet a minimum threshold. We will have something called an information session, where typically a Weight Watchers leader sometimes with the sales rep they would come in give an information session, get people excited and secure commitments that would allow us to sort of tip over and secure that we had enough control memberships that we could then open up the meeting, because there is typically a minimum meeting size depending on situations anywhere from 15 to 20. If we are short of that minimum meeting size, the meeting doesn’t open at all. And effectively those people have to pen for themselves by finding a local community meeting, which will effectively mean watch the enrollments. What was happening was that sort of information system session where the person is on site. What we missed in that is that it played a critical role in sort of kind of getting those last four or five incremental members, which made the difference between opening the meeting and not opening the meeting. In our effort to replace that, with this kind of fully automated web-based solution we lost the sense of urgency if you will, in how we got the new meeting initiative. So what we’ve now done…

I probably didn’t do a good job of translating it. We are going to have that in addition to having the website, Brian Joseph Wang – Barclays Capital Inc.: Both going forward.

It’s going to be both. The other thing that we are going to do, is that for very, very small accounts and now I could be talking about a local high school. We are going to reopen the past building, they don’t have to get the Monthly Pass, they can still do (inaudible). So what we’re also doing is we are really getting smarter by segmenting our approach, when ironically we did this to benefit the larger accounts. And the larger account part of the business is going just great. So that have the desired outcome and we believe that large account part of the business is going to be where most of the growth is, as we go out two, three, five years, We figured some pretty tremendous opportunity for us. And that is absolutely on track the problem is that right this red hot second it’s just not bigger part of. today’s mix. Brian Joseph Wang – Barclays Capital Inc.: And just one last separate question, just on the change in the reported fourth quarter on line paid, can you explain why there is a change, why is it updated.

Yeah it was a clarifier literally because we had a manual process for loading some of that data into our system. And there was a clinical area that we just frankly missed. We have since automated the process and we have tightened up some of our controls around non-financial metrics particularly 10 weeks. So, its been dealt with, it had zero impact on financial results. Brian Joseph Wang – Barclays Capital Inc.: Okay, thank you very much.

Yep.

Thank you. Our next question is from Bob Greg of Stifel Nicolaus please go ahead. Bob Craig – Stifel Nicolaus: Thanks good afternoon everybody.

Hi, Bob. Bob Craig – Stifel Nicolaus: David in hindsight what was the problem do you think with the UK marketing and looking at most of your countries now Germany, France, NACO obviously is what they are lacking an effective spokesperson.

I think that is part of it. What they are lacking was, I think what an effective spokesperson does when he works for us is if you’ve someone who people can relate to is also having a weight issue, but their success is very visible, it’s always a main thing how much inspiration people take from that. And they have tried something that was a little bit of a different approach they were real members, but they were using sort of lots of real members. And they tried some different things that they thought was an appropriate reflection of kind of culturally where they thought the British consumer was. And they tried something that was a little bit different. And I think one of the balances that we’re always trying to reach as an organization is that we want a management team and we want local management team that will try things, that will try to push the envelope and we are periodically try to take risks, and help us grow and develop the business. And we are always trying to manage to what degree do we sort off push things top down versus local management teams stretch their legs and try different things. And in this case my judgment was to be supportive of the UK team and trying something a little bit different. It didn’t pen out and I think one of the broader statements that I would make about Weight Watchers is that I’m frustrated by the exclusion issues because there are things we could have avoid it, and that’s disappointing. At the same time, I don’t want this organization becoming a risk of us. We’re not going to get to where we need to go, but we’re not willing to try things and we’re not willing to push ourselves a little bit that does mean from time-to-time we’re going to skin our knees. I think we need to sort of be more careful where we run, but we need to keep running. And so when I look at the UK marketing, while I am disappointed and I think frankly, they look at what’s happening for example in Germany where they are using celebrities spokesperson and their business is growing just great. Their online business in particularly is completely on fire right now. So they look at that and say, “Okay, we got it.” And we know that we need to have something that looks like closer to that. They came to that conclusion on the row and as opposed to having a pushdown. Bob Craig – Stifel Nicolaus: Okay, was Monthly Pass the price increase there, do you think there was a headwind to new enrollment at all?

I can always create a little bit of a headwind, again because it really impacts new people coming in the door. And so I can’t rollout that that might have had some effect on it. And with price increases, as you know I mean you do them periodically and sometimes you recognize in the very short-term. You might encounter a little bit of resistance, but than you recognize that as you’re sitting there at this time next year, you’re incredibly glad that you did it. And I think that’s going to the case. With NACO, when I think it’s going to be the case with the UK as well. Bob Craig – Stifel Nicolaus: Okay, you mentioned the male retention being greater than women, did you expect that number one and should that continue?

No, men never sees the bafflement, we did not expect that I actually thought that their satisfactions scores among guys doing Weight Watchers Online tend to be a little bit better than women. I didn’t think that that would translate into a lift on retention, but it’s a funny thing. It’s continues to be curious and amazing to me, the number of guys that I run into now or talking about doing Weight Watchers and there are guys that I never would have expected to be doing Weight Watchers and/or having tremendous success with it. And so it’s certainly gratifying to see them having success and seeing them sticking with their subscription even longer than what we’d anticipated. Bob Craig – Stifel Nicolaus: Great, thanks David.

Yeah.

Thank you. Our next question is from Greg Badishkanian of Citigroup. Please go ahead. Greg Badishkanian – Citigroup: Great, thank you. If you look at just keeping on men’s over the next year or two, how big do you think that could be as a percentage of your North American business?

It’s a tricky one to dimensionalize, but let me provide a couple of statistics for you to maybe help sort of ballpark it. And then I can talk a little bit about where we are right now versus what we haven’t gotten to going forward. So first half, in terms of what is the aggregate theoretical potential. Men are as likely to suffer from obesity as women and their health affects that they experience are the same is what woman experience, and so that kind of net aggregate need is at least as high for men as it is for women. However, they are about half as like we reduce something about it. They tend not to face at least today the same sort of pressure around media and having a feel like they need to looks and everything else that you see with women. So they have been historically was likely to take action. So if you take that 50% is likely to do something about it that would suggest that a theoretical mix of men would be say a third that’s I believe that the willingness of men to be able to weight issue will increase over time as increased recognition of health affects of obesity would become more, more clear. Then there is what are we doing, if we’re currently say for example, 15% in Q1 what stands between us in getting to that higher level as we go into the future. and within the U.S., I would say that if you look at for example, 2012, we’re going to be on I think with guys, men’s advertising a total of 15, 16 weeks for the full year and still not a huge media weights. and so one opportunity for us is to use the same playbook we used for Weight Watchers Online to increase media weights into beyond more weeks, which is a formulative work really well for Weight Watchers Online. The other opportunity for us is that we have not yet launched Weight Watchers online for man in any of our international markets and that's also an opportunity that we believe is going to be in front of us. Greg Badishkanian – Citigroup: And so looking at the North American business, if you exclude the corporate accounts business, did your core meetings business, did that improve throughout the quarter and into April?

What’s interesting if you look at 2012, 2011 sorry, if you look at the enrollment trends in 2011 compared to ‘10 and ’09. we had a just incredibly great enrollment period that did not let up until literally we went off promotions getting in toward the end of March, prior to getting into the Easter timing. and as I looked at 2012, one of the things that I was comparing to is I was doing that comparison up to 2011, but I was also comparing to 2010 and 2009, which didn’t obviously have anything of [value] to the PointsPlus launch, and the good news was that 2012 enrollments from both members and rejoins were pretty consistently ahead, nicely ahead of both ‘09 and ‘10. So I think that that was a good indicator that notwithstanding sort of the huge blip we got from the PointsPlus launch in Q1 of last year. If you look at it kind of on a sustained trendline, the enrollment levels we saw in 2012 looks pretty reasonable to us. Greg Badishkanian – Citigroup: Yeah. In the Easter shift, how did that impact trends?

Literally the problem with Easter shift is only one of interpret in Q2 results, I mean, Easter of last year was two weeks later. Greg Badishkanian – Citigroup: Yeah.

And so we have – right now, we effectively have three weeks of like-on-like comparisons, spring-campaign-to-spring-campaign. Greg Badishkanian – Citigroup: Right.

We did promotionally something a little bit different. we did a two-week program this spring then jumping to join for free. and so there are some ins and outs, it’s simply just too early to sort of fully sort through what we say in the spring campaign, because we can only meaningfully look at three weeks data. Greg Badishkanian – Citigroup: Yeah, thank you.

Yeah.

Thank you. We have a question from Gary Albanese of Auriga. Please go ahead. Gary Albanese – Auriga USA, LLC: Hi, David.

Hi, Gary. Gary Albanese – Auriga USA, LLC: Hi. It just – I don’t mean to beat this issue. But with the tender, I know you don’t try to time the market and I'm sure if you guys going to – were planning this well in advance of the announcement date in February. But can you just sort of take a step back and think about what the weakness in the – that you are seeing that maybe you should sort of postpone it and sort of wait see and maybe reintroduce it maybe like a month later than you actually did?

When we put the tender in place, we made that decision as were working up to the earnings release for Q4 when we provided guidance. And the decision we made the right way to handle this was to announce the tender at the same time we were announcing Q4 results and providing guidance for the year, and that fully put the process in place. The process of that point, the tender was sort of going through, it’s very regimented and structure process. and so it would have been just the wrong thing for us to do to make some decision kind of midway through the process based on a couple of extra weeks of data beyond where we were during the Q4 call to do something differently. So, from our point of view, I feel pretty comfortable that we timed it in terms of making sure that we’re providing the right information to selling shareholders, it was a right opportunity in terms of securing the debt financing, because the debt markets were open. it was the right timing in terms of making sure that the market had full and adequate information and all those things together is what we used to arrive to the decision to launch the tender when we did. Gary Albanese – Auriga USA, LLC: Okay, thanks for that. Just another issue, with the price increase last year, when we saw in the meetings business, do you think that's acting as a little bit of a drag or is that sort of inconsequential, do you think to the customer decision at this point?

It’s always a little hard to say when you have so many different things that play, including the comprehensive program launch et cetera, et cetera. Again, the point I would reiterate is that because we make the decision to grandfather existing members, by running a price increase at the beginning of January, it really kind of – you could argue that it has a disproportionate effect on enrollment driving activities, because it only effects new people enrolling and we really don’t get a lot of financial benefit from it. Yes, we generally are buys to do these types of actions and moves in January, because that’s also going to be a higher converting period. And we knew that if we did this in January, over the full-year, we’d be getting full benefit from that price increase. Even though, we knew that there was some possibility that it could create some near-term headwind during the first couple months of the year. So it’s always a little bit of a judgment comp. But I think in the final analysis, it was probably still the right judgment comp. Gary Albanese – Auriga USA, LLC: Thanks, David

Yeah.

Thank you. Mr. Kirchhoff, we have no further question sir.

Okay. Well, thank you very much for joining us today and I look forward to speaking with you again at our next quarterly earnings release.

Thank you. The conference call has now ended. Please disconnect your lines at this time. Thank you for your participation.