Ladies and gentlemen, welcome to the Weight Watchers International second quarter 2010 earnings teleconference 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 given at that time. As a reminder, this conference call is being recorded today, August 5th, 2010. At this time, I would 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 second 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 PM Eastern Time today, the company issued a press release reporting its financial results for the second 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 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, our more detailed discussion of forward-looking statements and risks and certainties of such statements. All forward-looking statements are made as of today and except as required by law, the company undertakes no obligations 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. David Kirchhoff Good afternoon, and thank you for joining us, as we review Weight Watchers International’s performance for the second quarter of fiscal year 2010. After a very difficult first quarter, our second quarter business results improved significantly…

Good afternoon, everyone. As David noted, our second quarter operating results (inaudible) improvement trend versus the first quarter. Our financial results recap as follows. Second quarter revenues of $376 million, which increased 1.1% on an as reported basis were actually up 1.8% on a comparable constant currency basis. Net income of $56.3 million in the quarter was 4.2% below the Q2 ‘09 level on an as reported basis, but down 1.4% from the impact of unfavorable foreign currency is renewed. In addition, Q2 2010 includes increased interest expense of $2.6 million pretax, which accounts to the 2.8% is declined in net income versus the prior year in the quarter. Reported EPS was $0.73 versus $0.76 from last year’s second quarter, a decline of $0.03 in total, but with $0.02 of negative foreign currency exchange accounting for most of the decline. There are two items related to expense in the second quarter of last year which should be noted. First of these is a restructuring charge of $2 million, taken in last year’s second quarter associated with cost savings initiative, which when removed increases 2009 Q2 EPS by $0.02. The second adjustment relates to the adverse UK court ruling we received with regard to leader self-employment status. This ruling resulted in a charge in the fourth quarter of last year, $1.1 million of which related to the second quarter of 2009 and which was a similar ongoing impact to each quarter going forward. Adjusting the second quarter 2009 for comparability reduces Q2 ‘09 EPS by $0.01. After adjusting 2009 for both of these items and 2010 for the negative impact of foreign currency translation, EPS for the second quarter of 2009 is $0.77 as compared to $0.75 in 2010, with higher interest expense of $0.02 included in the 2010 quarter. Our…

Thank you, Ann. Reported performance for the first quarter was a significant disappointment and wakeup call for me and my management team. I have been very pleased and gratified to see the team rise to challenge particularly in the all important NACO market. The positive impact of the spring marketing campaign was a clear demonstration of our ability to begin moving the business back to the growth mode but we do not expect the macroeconomy particularly low consumer confidence to provide much win to our sales over the course of this year. It is highly motivating for the team to feel the confidence beginning to move enrollment levels forward. This is particularly true as most of our planned growth driving initiatives will not begin to provide a positive contribution until we move into 2011. On this note I would like to provide a brief update on the status of some of these growth driving initiatives. New program launch, for competitive reasons we are not yet in a position to share all of the details in the new program beyond what we have shared in prior calls. However I can tell you that we have been running ongoing prototype sites with the new program for sometime now, the number of response continues to be extremely positive. The more I see this new program in action, the more I believe it is the right program at the right time. Our job is to fully leverage this as we move into the 2011 winter campaign from January in our NACO, UK and Australian markets. To this end, the focus of the team is now for us to one, optimize training and preparation for our service providers to ensure a seamless transition for existing members; two, support the program launch by developing marketing campaigns…

Thank you. (Operator Instructions). We thank you for your patience. Our first question is from Jason Anderson from Stifel Nicolaus. Please go ahead. Jason Anderson – Stifel Nicolaus: Good evening everybody. How you’re doing, I’m here for Jerry and Bob (ph) today. One thing, could you update us on the penetration rates of monthly pass by market and also is there a, I mean I thought a 100% would be a sealing for that. Is there a sealing you guys manage to for that?

Ann is going to pull up some of the penetration data but while she is doing that, what we’ve said historically and what we’ve been seeing is generally speaking increases in penetration rates and monthly pass even as we continue end of this year. At some point, we bump our head up against the theoretical sealing which is people should have access to some levels to the internet use of the monthly pass value proposition. And there is certainly going to be those people that might not be comfortable using their credit card in (inaudible) basis. And so I think to your point, it seems unlikely that a 100% penetration is a near term possibility. But I do believe what we’re seeing is that the value proposition being able to get sort of unlimited accessed meetings as well as all the internet tools is an incredibly compelling package particularly given the value of monthly pass. So I have every reason to believe that the vitality of the monthly pass proposition will continue unabated and I certainly would expect overtime opportunities to sort of further increase penetration. The relative degree of increase in penetration is obviously going to vary from country to country depending on where they are at the particular moment in time. Jason Anderson – Stifel Nicolaus: Okay.

We had sort of significant increases in penetration. If you look at North America for example, we’re up to 63% of attendances in the second quarter of this year versus little less than 60% last year at this time. If you look at the UK, we’re growing from about 55% over 60% and if you look at Germany we have a huge penetration of 80% versus like 75%. So we’ve increased penetration times across the board. Jason Anderson – Stifel Nicolaus: Great. Thank you for that color. And it doesn’t sound like you probably have time to analyze this later half results but on the retail modernization projects I don’t – have you see enough to see any results and attendances or enrollments and I sounded pretty fresh but I didn’t know how early in the quarter or this year you would started that?

Well the latest version of the design is going to up – it’s going to be up in the members as of Sunday, so I think it’s definitely too early to comment on that. And the lease renegotiation process, they’re – it made fantastic progress for example in the St. Louis and Tampa markets. It’s still a bit early and I also think that it would be prudent once we have new locations and designs our end to give them a chance to settle in so that we can sort of look at the data and have enough of a longitudinal dataset so we can get a better sense of what incrementally we think that they might be doing for us. I can tell you that on a very basic level, the share retail presence of what they now look like in the locations where we’re now being positioned is a significant improvement from where we were, I mean really Weight Watchers has an opportunity to go from many places being someone invisible to having a nice presence that really pops them and attractive in modern way. Jason Anderson – Stifel Nicolaus: Great. Well, I’ll be looking forward to hearing results for that, and one other question here on the marketing front, and I believe you referenced 3Q possibly more marketing if I heard that correctly. Could you give us, I guess some more color on 3Q and 4Q ‘010 and then possibly fiscal ‘011 on maybe a percent of revenue, should we see an uptick like we saw this quarter?

Yes, I mean if you’re looking at 3Q you’ll probably see more of an uptick as a percentage of revenues even then you saw in the second quarter. And 4Q that will come down a bit. We’re not up here to disappoint to talk about our marketing expenditure revenue in ‘011. I will say that we’re pretty happy with our marketing results and that’s why we’re increasing our investments for the quarter. Jason Anderson – Stifel Nicolaus: Okay, great.

I think it’s also worth noting that if you do that, from a P&L impact perspective, one think to keep in mind is that as we spend incremental marketing dollars particularly in the back half of the year, the revenue benefit from those is limited in terms of what we’re going to observe in that particular quarter, whereas we are going to recognize all the expenses and obviously as incurred. And so these are going to be, this incremental marketing is going to be going in a way where it is absolutely driving incredibly positive return on investment over the course of that enrollment, but the revenue benefit and contribution margins from that enrolment we’ll be experiencing, for example not just in Q3 but Q4 and frankly going in to 2011. Jason Anderson – Stifel Nicolaus: Good points and thank you for that. That’s all I had.

Thank you. (Operator Instructions) our next question is from Chris Ferrara from Bank of America. Please go ahead. Chris Ferrara – Bank of America: Hey guys, how are you?

Good Chris, how are you? Chris Ferrara – Bank of America: Good thanks. So look I’m understanding of course you don’t want to give too much detail on the new program when I get that, can you at least try to give a little color on what you think this new program has (inaudible) 17, I guess obviously qualitatively, I mean what are the different aspects that would give you this increased degree of confidence because your confidence seems to have ramped each time you’ve spoken to us I guess over this year?

Yes and I apologize for being slightly evasive on this point, above and beyond what we’ve already talked about I mean a lot of what I’m seeing from this program, a lot of the details of why I think it’s so great are going to be speaking to qualities that we’re going to do our best to keep under our head and so we have a chance really for our marketing campaigns together and that’s why for relative reasons, I’m hesitant to get into much detail. During the month of early August about the specific value of the new program. Other than to say that, it’s sort of, its cumulative effect on member behavior and a really positive and empowering way. It’s just been really exciting to see and member satisfaction has been incredibly encouraging. And I apologize ahead of time but I can’t go into too much more detail around that, certainly as we get into the next quarter, we’ll be able to get into a bit more specifically. Chris Ferrara – Bank of America: Okay and I guess it sounds like what’s driven better recruitment more recently, is it Jennifer Hudson campaign in NACO and I mean tell me if this is wrong or right, I guess should we be thinking about in a way that like that’s what’s helping now but the true recovery of NACO will really come down to this innovation in how you market, right. Jennifer Hudson and obviously she is your spokesperson, I don’t know if that’s going to help but the specific campaign that’s going on right now, but it doesn’t necessarily translate to success in January right, would translate to success there is going to be the success of the innovation, right?

Well I don’t think I would characterize it exactly like that, I mean symbolically we understand what you’re saying but I would characterize it a little bit definitely. And the way I would characterize it is that if you go back to kind of what we experienced this past Q1, we own the fact that the marketing that we had on the air had gone along in the (inaudible) it was not really cutting through, it was not compelling, it was not making the right kind of emotional connection with potential customers. It wasn’t creating the kind of excitement and buzz that’s necessary to attract NACO members. We really didn’t have any PR to speak up. And frankly that was a huge issue for us in terms of just not being part of the conversation and so I look at that and then I compare the marketing programs we’re running right now, having marketing that more than punches its way in terms of advertising, having strong and compelling PR, just this week, Jennifer Hudson is now on the cover of InStyle Makeover magazine which is going to be sitting on the charts for the next six months. I think the value of having an (inaudible) like Jennifer is tremendous in terms of giving a PR custom role (ph). And what I would say is that the marketing continue to deliver in a powerful and incremental way even as we go into 2011, I agree with you that and frankly even if I didn’t have a new program in 2011, I’d be feeling pretty good about my prospects going in to Q1, clearly on the back of the marketing in terms of making it significant improvement versus plan that we stop. Now layer on top of that, the news value of having a major new program layer on top of that beginning to see very early benefits of the retail efforts that are going to be continuing into 2011 and then there is other thing that we’re continuing to work in the pipeline that are also going to be contributing for the NACO environment story. And so what I see is initiatives that layer on top of each other. And that are going to have continuing spending strength as opposed to something that gives us say a three or four month profit and then goes away. Chris Ferrara – Bank of America: That’s helpful, I appreciate that. And can you – I guess can you quantify or put some numbers around the bump up in recruitment trends and can you remind me what that cost was that we’re looking at right, just to get a sense of just how big because I understand that the attendances follow this and you put yourself into disadvantage with the first quarter, but can you just try and put some numbers around what the recruitment look like more recently.

Yes, I’ll sort of, I’ll cluster around it a little bit. As you know we don’t release specific enrollment numbers because of the nature of the metric and it has its own complexities in terms of getting like, unlike comparability. As I referenced in the last call, and its consistent with this as you heard me say in my prepared remarks. We bumped up sort of on enrollment kind of slightly positive, is a way I would characterized it, I’m not sure if I wanted to mention why is it in terms of numbers but sort of slightly positive for the second quarter. And then certainly we’re seeing a continuation on trend in Q3 and Ann have you got something you want to add to that?

Significant change in…

That was versus being down double-digit.

Yes.

Chris Ferrara – Bank of America: I got you, but this – I mean, so down it sounds like if there is specific recruitment trends in Q1 would have eventually led to us further deceleration of the tenant. Now you’ve gone slightly positive. How do I think about slightly positive with a big new advertising campaign within A list celebrity, I mean I got like, I get the change from Q1 to Q2, right. But I’m trying to get, I guess dimensionally I mean I don’t want to – like I guess that this stuff takes a little longer to turn around right, you’re not going to go from no momentum to massive momentum but is that, like if we think about the absolute not just the change from Q1 like forget Q1 for a second, is Jennifer Hudson driving low, just modestly positive recruitment trends, a good thing or is that just kind of okay?

Well no, I think it’s a great thing because again as you heard me mention that it’s not the only thing we’re doing, it’s one thing that we’re doing and its already by itself an isolation having an impact and I think the other thing that you heard me mention in my prepared remarks is that most significantly it had an impact or members. And you – I mean Chris you’ve been on these calls for more quarters and you’ve (inaudible) and as you know NCAO (ph) enrollments have been a source of sort of ongoing weakness and if there is sort of one thing that’s been dogging us, it has been starting with trend on members (ph) and to sort of see and keep in mind it’s also not like the spring campaign hasn’t enormous amount of media way behind it. So you again see the change and the shift in trend, we found to be incredibly compelling. Frankly, rejoins will tend to follow members (ph) in future periods obviously. And so what this campaign has shown us is that marketing specifically for Weight Watchers meeting can absolutely be driven, it can be driving increased interest by people who have never darkened our doors before and this is in a very important point to us. I think the other thing I want to point out is that if you look at just the overall participation in the brand, and frankly look at it at a global level, is that our total paid weeks are up 8% versus the prior year period, which is I would argue fairly significant uptick in interest and better than frankly what you’re probably seeing in most of the systems or categories product. The online business is absolutely been on first. I don’t know how else to put it. What’s interesting about the online business is that their advertisements did not rely on the celebrity. It leverages that same concept of work of mouth and word of our members but it did it in a different way but it did it in a way that had the same kind of (inaudible) was incredibly compelling and what we’re seeing is that the collective impact of both of those things is that consumer, sort of net consumer interest in Weight Watchers absolutely increase in a significant and measurable way in the second quarter on the back of marketing by itself without the benefit of all these other things that I talked about. Chris Ferrara – Bank of America: That’s really helpful, I appreciate on the color as always, thanks,

Sure.

Thank you. I would now like to turn the meeting over to Mr. Kirchhoff.

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

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

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