Good afternoon, and welcome to the Weight Watchers Third Quarter 2013 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Lori Scherwin, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and thank you to everyone for joining us today for Weight Watchers International's Third Quarter 2013 Conference Call. With us on the call today are Jim Chambers, our President and CEO; and Nick Hotchkin, Chief Financial Officer. At about 4:00 p.m. Eastern Time today, the company issued a press release reporting the third quarter financial results of fiscal '13. 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 SEC. 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. Please go ahead.

Thanks, Lori, and good afternoon, everyone. Today, our planned remarks will address 4 topics: our third quarter results; the outlook for the remainder of 2013; context for our early thinking on 2014; and I would also like to share with you my assessment of why we are where we are and the strategies we will employ to improve performance going forward. Next Wednesday, at our Investor Day, we will share more detail on these same strategies and have a underpin our transformation plan, as well as how we will keep you up-to-date on our progress. I see now that this situation we are facing as a business and organization is more difficult than it originally appeared. Although our third quarter profit results exceeded our expectations as a result of strong cost management, it is clear that our top line momentum is weak across nearly all our business lines and geographies with steep declines in recruitment being the principal cause. This weakness has accelerated as we have moved further into 2013 and will continue into the fourth quarter and calendar year 2014 as the wave of free apps stealing trial in the category continues to adversely impact our online recruitments in particular. Notwithstanding their easily understandable appeal, we do not believe that free apps will solve the obesity epidemic. We do believe that Weight Watchers is best positioned to do so, but we need to change to accomplish it. That having been said, I want to be clear: I believe we can transform this company, but we have a lot of work to do to finalize, validate and deliver our strategic initiatives and achieve our potential. It will take time. There is no silver bullet. Weight Watchers has built a good business and a great brand over the last 50 years.…

Thanks, Jim, and good afternoon, everyone. Similar to the first half results, the third quarter showed continued progress with our cost agenda, but also saw weakening revenues as a result of negative recruitment trend. We were pleased that results exceeded our expectations given the team's aggressive focus on costs. But as Jim described, there is much more to do to get the top line moving and then even more aggressive cost agenda to pursue. The key issue we have faced this year is negative recruitment. Paid weeks and revenue growth lags recruitment, given our subscription-based model, which is why you have seen the revenue trend get progressively worse throughout the year. Specifically, total company revenue declined 3% in Q1, 4% in Q2 and 8.5% in Q3. Third quarter total paid weeks were down 6.6%, embedding declines for both meetings and WeightWatchers.com. Operating income declined 6% as cost savings only partially offset the impact of lower revenue and investments in the business. As a result of this and higher interest expense related to our April 2013 refinancing, our Q3 EPS was $1.07 versus $1.20 in Q3 2012. Let me share more detail on the quarter, starting with WeightWatchers.com. The competitive environment is challenging, driven by pressure from free apps and the proliferation of activity monitors. These continue to hit our recruitment, though, importantly, our retention remained solid. Third quarter revenue rose 1%. Paid weeks declined 2.6% and this is the first time in our history that WeightWatchers.com paid weeks have declined on a year-over-year basis. End-of-period active subscribers declined 5%. Given this trend, we expect Q4 paid weeks to be down mid-single digit and online revenue to decline by a similar percentage. Within the meetings business, NACO remains under pressure. In the quarter, total NACO meeting fees declined 11%, paid weeks…

[Operator Instructions] And our first question is from Jerry Herman of Stifel. Jerry R. Herman - Stifel, Nicolaus & Co., Inc., Research Division: I guess, the first question relates to the launch, if you will, in January of next year. It seems like your expectations are relatively low there and is it too early to get any read or test activity on the receptivity of that program?

Yes, thanks for the question Jerry, this is Jim. We're confident in what we have planned for the market in January. I'm not going to share too much detail around the testing and validation path there, but we are -- we're tapping into some core category drivers and we're facing head-on some of the consumer perceptions around our service and we're centered on making an easy way to start Weight Watchers working against a consumer sense that maybe were a little too complicated and maybe require a bit too much of a commitment. So we're tapping into an insight that we think is very compelling and we're ramping a program around that. Important to note, at the same time, we are tempering our confidence in our programming next year, not just in January but in general, with our increasing sense of how trial is being impacted in this marketplace associated with the continued activity of free apps. So we do have confidence, but we're cautious as to where that will net out.

Yes, I think that's right. And if I could just add, Jerry, look, we're confident in our program in looking to drive the top line aggressively in the winter diet season. But as you saw in what I said about our revenue trend leading to a low double-digit decline in the fourth quarter, we're really just starting to feel the full impact of the steep recruitment declines we've seen this year. So that's particularly true for dotcom, with the dotcom only turning negative in Q4. So regardless of how successful our winter diet season is, we know that 2014 will be a very challenging year. Jerry R. Herman - Stifel, Nicolaus & Co., Inc., Research Division: And my second question, just with regard to online, maybe a 3-parter, if I may, the first part easy. Do you intend on reintroducing a male initiative in next year? And then, the second part and third part, I guess, relates to the relationship between pricing and cost structure and online. I know you folks have devoted a lot of resource to building online. Jim, do you think those 2 metrics are aligned properly at this point?

First off, with respect to men as a strategy, if you will, as a target segment, I think we had pretty good results with the initiative we did in the past. But frankly, we see a bigger strategic opportunity going forward that needs cultivation and assessment. We would have to approach that a different way. So that is on -- that's on the agenda strategically, but I wouldn't expect that in the near term. And broadly, with respect to pricing and the competitive frame, I think I alluded in the remarks to the fact that we do see, particularly on the online product, that we need to provide enhancements to bolster the value proposition there. The folks who are using that offering with us are having success or having good levels of satisfaction. But that is where the competitive changes are focused and we need to evolve and stay ahead of at that and enhance that product offering to deliver more value there. That could include features, that could include different promotion tactics. I think there are a number of options on the table.

Yes. And look, Jerry, obviously, look, our men's dotcom sign-ups in the U.S. are down given the decision not to run a specific men's campaign. But in Q3, men still represented, roughly, 12% of monthly past sign-ups in the U.S. So we're still attracting men to this business.

[Operator Instructions] And our next question is from Meredith Adler of Barclays.

There was one -- when you did your launch, Jim, you talked about a couple of things that were particularly interesting. One was personalization, making WeightWatchers.com more like Match.com. You also talked about multiple flavors and I think you were talking about combining support with the online tools. Do you have any more sort of visibility into how you leverage your greatest strength, which is support?

I think this question ladders up directly to our strategy around reimagining the core offering. And if I remember that conversation -- and arguably not as well as you do, apparently, but if I remember that conversation, I think what I was evidencing was the way that we could imagine taking the gems in the current offer that we have and bundling, arranging, presenting them in different ways to reach the same targets in a more compelling and deeper fashion, as well as a different targets altogether. And that combination of leveraging what we have that we know works, including support, as you mentioned, against a consumer-defined set of needs and opportunity, that's basically what that strategy is about. Does that answer your question?

I think so. I mean, I think, hopefully, some of that will be fleshed out a little bit more. And I guess, another question I have is you've obviously brought in some new senior leadership in a couple of important areas. I had asked you this question at the launch, but I guess I'll ask it again, how much change is really needed in the organization to get you where you want to be? Is it remedial work that can be done? Or are there going to be more significant changes in the staff?

I think in general, a lot of change is needed. I wouldn't jump to a conclusion about how much that is or isn't with respect to the staff, in particular. But I think a lot of change is needed. We have a lot to work with. We have a lot of institutional knowledge around this category and the products and the history of what we have done, what works, what doesn't work, the depths of scientific perspective. But there's a big difference between being in a company that looks at the consumer but thinks about what it has and pushes it, versus a company that is day-to-day, without even knowing it, running by responding to the marketplace. And I've spent the better part of 30 years in those kinds of businesses. So for me, maybe it's a little bit second nature. And that's the transformation that we need to make. And I think it sits above the concept of staff. Will we make additional organization changes to better align ourselves with that kind of a model? Yes. But a lot of it has to do with the processes we put in place and a lot of it has to do with kind of creating the inspiration around the folks that are there to get attached to that mission and to learn to do it that way. It is a very powerful thing when an organization lives in the marketplace first and translates that into their actions second. And I think that's a big part of why I'm confident that we can get there. If we take all the raw materials we have and we lay it into a structure like that and we push ourselves to move quickly and respond to what the marketplace is telling us, I think we can be the ones to meet the opportunity. So I took your question and I spun it a bit into a platform speech, but I hope I addressed it.

Yes. And I'll just ask one more question. What is your sense of the response in the organization to what you're doing and what you're talking about?

I think people are extremely liberated by the sense that we are looking at things with fresh eyes. And that, whether you've been here a week or you've been here 10 years, we're all new, we're all starting from this point and we're going forward. And we'll take the best of what we have and the best of what we've learned, but we're able to leave a little bit of the baggage behind. So I think there's an excitement around feeling that liberation. That having been said, I hope they feel energized and I certainly hope they don't feel overconfident. This is a hell of a journey we're going to go on and we need to respect the degree of difficulty and just get each other primed and focused on what we've got to do. So I think that translates into a little bit of -- if that translates into a little bit of nervous energy, I'd be thrilled. So liberated and a little bit excited. But since we haven't laid all of it out there exactly, I hope they also feel like they will be invited into the solution. I mentioned in the critical cultural forces section of the talk that the word, impairment, which is such a terribly overused word, but fundamentally I think there's a lot of power to be unleashed in this organization by letting people do what they know how to do. Let's get lined up against the same objectives, but let's not run as much top down. Let's create the agility and let people get on with doing what we need to do.

And our next question is from Kurt Frederick of Wedbush.

A couple of questions. One is just on, generally, you do kind of like these product launches in market kind of every other year. I'm just wondering if your plans for next year are, I guess, more, I guess, encompassing, just going into all your markets and trying to make some program changes and updates?

I'm sorry, Kurt, is the question how universal might our innovation agenda be across our markets?

Right.

I think we need to be an equal opportunity employer with respect to where we see the value creation. Taking a perspective that isn't simply one market at a time can give us some leverage and efficiencies for having a multi-market footprint. In fact, as you see the January program unfold, I think you'll see a little bit of that play out already. That having been said, there are clearly markets where we are much more deeply penetrated and have much more, financially speaking, we have much more at stake and those are markets we have to get right. We've seen, as we've been in the other markets, levels of local innovation that are really exciting that we can steal with pride and use back in some of the bigger markets as well. So I think, as a place to cultivate, as a place to pilot, we have lots of opportunities and you'll see us test in places other than the United States, for example. So I think, we have a multi-market view. I think it's based on what we think the potential opportunity-by-opportunity is, but we do see the leverage in doing things the same way in many places at once.

Okay. And then just a question on the like the apps and activity monitors. Is that pressure seen, is that consistent across your geographies, or is it much more impactful in certain markets?

It does vary to -- to say again, the quantitative data on these things is not the best. But it does vary. And the U.S. is one of the more developed, one of the more pressured environments with respect to the kind of, what I talked to you before, the consumer trough around the free app offerings.

Okay. Then could you repeat, what was the comments you had made earlier about the Asia Pacific? Did you say you're evaluating whether or not you want to continue to invest there? Or what was the...

No, just in response to the resignation, we're evaluating what our structure and staffing options are going forward.

This concludes our question-and-answer session. I would like to turn the conference back over to Jim Chambers for any closing remarks.

We appreciate your participation in today's call. While disappointed with our near-term performance and outlook, we are excited about the potential to transform our business. We look forward to continuing our dialogue, in particular, at our Investor Day next week. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.