Good day, and welcome to the Weight Watchers Second Quarter Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Ms. Corey Kinger. Ms. Kinger, the floor is yours ma'am.

Thank you, Mike, and thank you to everyone for joining us today for Weight Watchers International second quarter 2014 Conference Call. With us on the call are Jim Chambers, our President and Chief Executive Officer and Nick Hotchkin, our Chief Financial Officer. At about 4 'O clock p.m. Eastern Time today, the company issued a press release reporting the fiscal 2014 second quarter results. 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 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 measures 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. I would now like to turn the call over to Jim Chambers, President and Chief Executive Officer of Weight Watchers International. Jim?

Thanks, Corey. Good afternoon, everyone and thank you for joining us. On today's call, I would like to update you on our business performance as well as on the progress we're making on our transformation initiatives. Nick will then take you through the details of the Q2 financial results, give the progress update on our cost management actions and review our outlook for the balance of 2014 as well as an early read into 2015. My remarks will follow the four strategic pillars of our transformation plan, which by way of reminder, are one, driving immediate performance improvement; two, reimagining our core offerings; three, growing our healthcare business and four, strengthening our organization. In the second quarter, we delivered total revenue of $398 million and excluding special items, adjusted operating margins of 30% and adjusted net income of $56 million or $0.98 per share. The biggest challenge we faced in our business continues to be recruitment as competitive forces continue to impact our current consumer offerings with mobile apps and activity monitors garnering a large amount of consumer and media attention and negatively impacting our consumer trial. Recruitment is down in a majority of countries in which we operate in both meetings and online. Importantly however, once consumers engage with Weight Watchers, they continue to value our service as shown by our retention trend. Average length of stay in Q2 remained at eight months for monthly pass members and nine months for Weight Watchers online subscribers. Our recruitment trends in Q2, while still negative, are not deteriorating further. Combined with the cost management actions we have taken, ranging from taking cost at our vendor relationships through improved procurement capabilities to reducing the size of our organization, we are managing through a tough environment in making a positive impact on our…

Thanks, Jim, and good afternoon everyone. Current Q2 we saw a continuation of our negative topline performance. Total company revenue in the second quarter declined 15.6% to $398 million. Continental Europe continues to be our strongest topline performing segment, particularly France. Second quarter global trade weeks were down 14.4%, driven by declines in online and meetings. End of period global length of subscribers declined 12.7% to $3.4 million with monthly pass active subscribers down 10.7% to $1.4 million and active online subscribers down 14.1% to $2 million. Despite continued expense discipline, our lower revenue and substantial pressure on the P&L resulting in an operating income decline of 25.6% in the second quarter. EPS was $0.95 on a reported basis and $0.98 on an adjusted basis in the second quarter, Adjusted EPS excludes $0.07 in restructuring charges and is partially offsetting $0.04 net tax benefit associated the closure of our China business and the recognition of the valuation allowance related to tax benefits for foreign losses. In the prior year's second quarter, adjusted EPS was $1.39, which excluded a $0.24 charge related to our 2013 debt refinancing. For reference in the quarter, foreign currency benefitted our results or approximately $0.02 per share. During the quarter we continued to deliver incremental improvements across many areas of our business and as a result Q2 EPS came in ahead of our internal expectation. Turning now to our results by geographic segment, which I will discuss on a constant currency basis, our North America business remained under pressure and in the second quarter total North America revenues declined 23.6%. Meetings increased 19.3% and online revenue down 22.2%. Meetings paid weeks declined 16.9% and online paid weeks declined 21.1%. In-Meeting product sales declined 30.2%, with product sales per attendee down 16%, primarily driven by lower sales…

Thanks Nick. Looking back on my first year as CEO, we started with a forthright situation assessment and translated that into an operating plan with a short term urgency of a turnaround and the strategic vision needed for a longer term transformation. We are executing on our multiyear agenda and I am encouraged by the early progress. We are aggressively controlling costs, developing a solid game plan for winter season 2015 and revitalizing the Weight Watchers brand. Building the foundation for a robust healthcare offering turning around our technology organization and capabilities and building a willing town base from executive leadership to all levels in the company. There is still a good deal to be done and we are committed to tackling the items before us as we build for the future. Thanks again for joining the call today and we will now open it up for questions.

Thank you. We will now begin the question and answer session. (Operator Instructions) The first question we have comes from Jerry Herman of Stifel. Please go ahead. Jerry Herman – Stifel: Thanks. Good afternoon, everybody. Nick I just wanted to ask you a question about the very last comment you made in fact with regard to the $0.60 impact. We certainly appreciate that color, but I am wondering if you could give may be some additional color detail around that in terms of some of the basic assumptions or even logic that you utilize to sort of generate that number.

Yes, sure Jerry. The impact is essentially driven by the fact that we had solidly negative recruitment this year, so both on our monthly pass actives and our online active subscribers. We start 2015 with both times with housing down 2015 versus the 2014 starting point and that drives the headwind that we've mentioned. Jerry Herman – Stifel: Okay. Great. And…

And just to add Jerry if I could, the headwind of those regulators active and as we reiterated with additional costs, variable cost to our offering that we are confident can be more than offset by the revenue that we'll generate. I might assess that in 2015 like 2014, you'll see us continue to invest in the business to finalize our tech reinvention and to complete our healthcare capability build-out. Jerry Herman – Stifel: Great. And guys I am wondering if you could talk a bit about the current subscriber base and in particular the composition of that subscriber base and what I am getting to is, is there any read on the percentage of all subscribers or users that are legacy users if you will as opposed to new users, what I am really getting at is are you getting close to some recurring user base of sort of loyal Weight Watchers customers?

I think Jerry, when you looked at our businesses on average. Folks in our meeting business, about two-thirds of those folks have been with us before. On the online business about one third of the folks in each of the brand, no, I think what we are confident then is that while we'll be introducing in 2015, while I feel both to new people to the brand and to lapsed members. Jerry Herman – Stifel: Okay. Thanks, I'll turn it over.

Next we've R. J. Hottovy of Morningstar. R. J. Hottovy – Morningstar: Thanks and good afternoon. I wanted to start on the healthcare business and Nick you commented about I guess it was Jim's comment about 2016 being the first year positive revenue contribution, wanted to see if the longer term goals that you establish at last year's analyst day, I believe it was $300 million in incremental opportunity was still valid and then maybe an update on how many strategic talents you have in that business. Just any color you have in that segment might be helpful.

Yes, let me start and talk to the analyst day part of it and then Nick can pick up from there. You are correct in recalling that on the day we expressed our basis for strategic interest in healthcare as part of it and unless put your view of how the company might look when we return to growth in the future, we did describe the healthcare opportunity in numbers. Like you are suggesting, we still feel that opportunity is there for us. I think we've been clear about the investment required to get there. That investment also plays very heavily against existing account base and our strategic customers as well. Those improvements in reporting an individual data tracking, those are very strong requirements in this channel. So we still feel that, that target is reasonable. We still feel committed to the healthcare strategy and I'll turn it over to Nick for the last half of your question.

Look I'll say that the strategic business, it's relatively small business for us right now about $25 million in revenue, but with good potential and we have some good projects in Q2 or I also signed six new strategic deals including Geico, Lincoln Financial Group and Heimat Health. We are confident that growing the healthcare business can be a good part of our future. R. J. Hottovy – Morningstar: Thanks and I had a second question just on technology platform in general, one is do you have plans to incorporate the app integration efforts that you have with Fitbit or some of the other partners out there as part of your 2015 marketing plans? And then the second question I had is what have generally been the meeting group leader response to some of the personalization efforts that you guys were talking about, just any color behind that, that would be also very helpful thanks.

Sure, with respect to the technology platform and integration, as I mentioned we are in the short run before 2014 is out, we will be leveraging API technology integration to provide access to a number of devices and in home appliances to richen the experience for Weight Watchers members. So that's a very distinct part of our strategy. We think it plays to the strength of our community. It extends their reach. It creates new partners and it begins to leverage the potency of fitness and weight management together, which is something we have always talked to and as evidenced by the very early work in Germany we can see that it really resonates with our members to be able to address activity in a very much more specific and deeper way along with weight management. So we see this as a particularly strong strategy for opening up Weight Watchers and leveraging the size and strength of our community to create an even stronger experience. With respect to the second question, our leaders and receptionists, they live for and they love helping members become more successful in their weight management journey and any and always that we can extend their ability to do that, are things that they find very positive. So early in our testing and in our dialogue with leaders around this direction they have been very enthusiastic and very responsive. R. J. Hottovy – Morningstar: Thanks.

(Operator instructions) Next we have John Faucher of JPMorgan. John Faucher – JPMorgan: Thank you very much. In looking at the $0.60 number that you discussed, you often talk about sort of an inflection point in the business, is that -- is the $0.60 number sort of a net number or does that include or does that include the benefit of this inflection that you are looking for I guess is there any earnings benefit from that? And then just a more technical question in terms of looking at the Q4 gross margin, is it the extra week I missed this, the extra week that's driving the Q4 gross margin performance to be worse than Q3 or is there something else going on there, thanks?

Let me start on the gross margin. Q4 like the first half of the year have been impacted by the operating deleverage due to lower volumes and the investments in our service provider compensation. As you get into Q4, you’ve not only got the ramping cost related to our healthcare initiative, but guidance also assumes launch costs and training costs related to our winter season offering and that's why the Q4 is progressively worse than Q3, In terms of the $0.60 impact that was purely the math on our expected starting point of how many people we have -- expect to have in our programs at the start of the year and it doesn’t I don't think include any view on recruitment. As you've heard, we're confident that it can be a main inflection point that will drive people to the brand next year. John Faucher – JPMorgan: Okay. I apologize, one more clarification. I think you talked about marketing spending being flat in 2015. I assume that's on a dollar basis, then?

Yes, that's a working assumption for now. John Faucher – JPMorgan: Okay. Thank you very much.

Next we have Glen Santangelo of Credit Suisse.

Yes, thanks. Nick, I just wanted to follow-up on the guidance you gave on 2015, as well. You also suggested you're still going to have some costs from your legacy IT platform, I think you suggested, and still making investments in healthcare. Will those investments be greater in 2015 versus 2014 of they be about the same just so we think about the year-over-year comparisons?

Yes Glen you’ve would imagined it's hard for me to answer that because I am not giving guidance today and we're just really the beginning of our funding costs. So I would just reiterate that we will have continued cost as we ramp down legacy technology spend particularly in the first half of the ramp up and new type capabilities and then we'll continue to invest in healthcare.

Okay, so as we think about the year-over-year comparison, you don't want to give us guidance in terms of how big that inflection point could look like. But you just want to signal to people that you are starting $0.60 in the hole, basically, given the run-off in the second half of 2014.

That's absolutely right.

Okay, all right. Jim, if I could shift gears. I wanted to follow-up. It seems like the company has posted some obviously better results in Continental Europe and I get it AsiaPac is an emerging market. It's still small, but you still have some pretty decent growth there. I'm curious as to what's working in the Continental Europe market, for example, that's not working in North America? Are you are approaching those markets the same way? Or is there something that explains the divergence in the results as much as it is?

I think there are a lot of moving parts, but at a high level I think one of the biggest differences is the maturity that compare the trend things impacting the digital space in the United States are more aggressive and having a more substantial impact on crowing our trials. There are some other plusses and minuses like I said and we referenced France for one which is having a particularly strong period of performance and I want to picture that because the comments I made about the future view around branding and our product offering I think relate back to something interesting in the French market. We have -- we have what I would argue is a mildly aspirational brand position in France and we get credit from the consumers in that marketplace for that. We are less reliant on promotional oriented advertising and have a better brand position and a better brand development sort of marketing tactics. And so amongst a couple of other things, that's putting that market out in front for us and I think that that is one thing that we would look in the aggregate to other markets and say there is potential in that. Central to the strategy around reimagining our offering as I said is strengthening our brand and this is a good reference point for us. If we can get the brand to occupy a stronger position with consumers, one that is a little more inviting, a little more open, a little more aspirational that resonates better, we will be in a much stronger position. So as a specific with respect to your question, there is something different there that we can look to -- I'll point at that one for the future as well.

Okay. Thank you.

The next question we have comes from Kurt Frederick of Wedbush Securities.

Thanks for taking the question. I was wondering, for the 2015 launch, is that something that's consistent across all the geographies? Or is it going to be more like a traditional where certain markets have different launches than the other markets?

Yes, I am not going to shed too much more detail, but it's safe to say that the strategies of personalization and community underpinning the direction for our offerings will be common across markets. I would necessarily assume that everything is going to happen the same way at the same pace.

Okay. And then just on the number of meetings centers. How it has that changed from the beginning of 2014 to the end of 2014?

Our retail footprint has been roughly stable through the year. I think in terms of the Weight Watchers branded company centers if you will. So where we've been achieving the operating expense savings has been really reducing the number of drop-in hours that we have and then also feel like consolidating small and medium that we haven’t been closing so also if you will.

Okay. Fine. That's all I had. Thank you.

Well, this will conclude our question-and-answer session. I will now like to turn the conference call back over to Mr. James Chambers for any closing remarks. Sir?

Once again, everyone, thank you for joining the call today and thank you for your continued interest in our company.

And we thank you sir and to the rest of the management team for your time today. The conference call has now concluded. At this time, you may disconnect your lines. Thank you and have a great day everyone.