Good afternoon, and welcome to the Weight Watchers Fourth Quarter and Full Year 2014 Earnings 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 Corey Kinger, Investor Relations. Please go ahead.

Thank you, Amey, and thank you to everyone for joining us today for Weight Watchers International fourth quarter and full year 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 fourth quarter and full year 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. Our remarks today will focus on 2014 performance and an assessment of early learnings from our winter season launch. We will also provide detail on our strategic and financial plan for 2015. When we unveiled our multiyear transformation plan we knew that 2014 would be a challenging year but we hoped to achieve positive recruitment sometime during 2015 leading to revenue growth in 2016. Our plan was based on strong cost management, repositioning our brand, improving our product offering and targeting new channel growth in healthcare. While we still believe firmly in our underlying strategies our execution at the start of the year was not what we had hoped for and I am disappointed to say that we are not yet where we expected to be and that our turnaround will take longer than we had anticipated. That’s why we are taking aggressive steps to adjust our marketing, to continue to improve our consumer offerings in both meetings and online and to right size our cost structure. Nick will discuss the 2014 results in more detail but to summarize 2014 revenue declined 14% to $1.5 billion. End of year global actives declined 15% to 2.5 million with 1.5 million online and 1.1 million in meetings. 2014 adjusted EPS was $2.03 and cash flow from operations totaled $232 million. During the fourth quarter we introduced a number of digital product enhancements, including improving our search functionality, enhancing the ease of use of our food and activity tracking, expanding our foot data base, and creating video content to enable members to more quickly mesh to the program. In addition, a key 2014 goal was enter into a nationwide partnership with a leading healthcare player and we are excited about our alliance…

Thanks Jim and good afternoon everyone. Let me start by highlighting a few key items in our 2014 financial performance. Q4 operating results were inline with our expectations and included costs associated with our winter season program launch and the earlier than usual Thanksgiving kick up of our U.S. marketing campaign. For the full year total company revenue declined 14.2% to $1.48 billion driven by lower meeting and online paid weeks compared to the prior year. We executed well on the cost side achieving a $150 million gross annualized cost savings target over 2013 and 2014. Given the operating deleverage pressures indicated by a gross margin decline of 350 basis points for the year we worked hard on G&A decreasing our year-over-year spend for the first time in five years despite increased investments in technology and our healthcare initiative. On an adjusted basis EPS was $2.03 for the full year. This excludes a $0.34 per share non-cash charge in the fourth quarter due to the partial impairments of certain intangible assets related to our Canada Meetings business. For the year we generated cash flow from operations of $232 million. During the year we increased our cash funds by $126 million. That ends 2014 with a cash position of $301 million. Now I will discuss our plan for 2015. As Jim mentioned an aggressive focus on cash generation and conservation is required, given our lower level of revenue and to maintain our strong liquidity. Specifically, our plan incorporates the steps to needed to end the year with a targeted cash balance of at least $350 million. This targeted cash level will provide ample liquidity to pay down our debt maturity of $300 million during 2016 and to run and invest in the business and this is without accessing the additional cushion…

[Operator Instructions]. Our first question comes from Glen Santangelo at Credit Suisse.

Yes, thanks and good evening. Just two quick ones, Jim if I heard you correctly and I was kind of writing fast so I apologize if I screwed this up but basically I think you said that only 3% of the members opt for the personal coaching. Do you know what percentage of the members are using the online chat support, we’re just trying to figure out what type of returns you are getting on those investments that you made and how you expect to kind of improve that penetration over the balance of the year?

Right, let me start by saying the reaction to the platforms that we introduced by our members has been very positive. As I said in the script we had a 90% plus favorability rate on the coaching platform and a strong rating as well on click to chat and it’s very early days obviously as we need to drive awareness of these offerings and cultivate the behaviors. I don’t have the exact statistics to get to the first part of your question as to the penetration of click to chat but I want to come back to stressing how favorable this reaction has been and the reason I refer to it as a platform versus a product as consistently as I can is that as these cultivate new ways to interact and drive engagement there are lots of things that we can put through these vehicles. So I am very encouraged about strategically what we have done and this was the imperative to bring the differentiating strength of our service providers and the Weight Watchers expertise into the digital realm. So yes the penetration is low, we do have opportunities to drive awareness but we are really encouraged with the start.

Okay. Maybe if I can just follow up and ask Nick a financial question, Nick you gave us some cash details. You are targeting $350 million in cash by the end of the year. Could you just remind us the specifics of the 2016 payment? And then maybe if I can ask to you look a little bit further when we look at the bigger payment that needs to be made in 2020 it’s pretty obvious that the debt’s trading at a pretty heavy discount. Can you maybe discuss what the strategy there is in terms of how you expect to sort of handle the $2 billion payment coming up?

Yeah Glen I would be happy to. First, a nice meaningful maturity, it’s $300 million due in April 2016. After that we have $2.1 billion due in 2020. Last year you saw us focus on cash generation and then increase the cash funds by $126 million to be sitting here today with $300 million of cash on the balance sheet at year end, so equal to the debt repayment next year and plan has us generating 50 million of cash this year at least to end the year with 350 million of cash at year end. So strong liquidity to deal with the April ’16 debt repayment. Beyond that we know and Glen you know the history of this company, as we get the top line moving the company can generate an awful lot of cash and so that’s certainly our plan to return to recruitment growth as soon as we can.

Okay thank you.

The next question comes from Eric Cohen of Barclays.

Actually, this is Meredith Adler. I was wondering -- I saw the press release about Humana and I was wondering whether Humana ever considered giving members you sign up for Weight Watchers a discount on the healthcare premium, because I think you’ve tried providing Weight Watchers services for free and it’s not that effective in getting people to really use the services because they don’t have any skin in the game. So I was wondering whether you had discussion with them, is that something that they considered.

Hi Meredith, I won’t comment specifically on Humana. I'm sure they could provide color on that but I would say to the sentence of the question I think you do see health plans trying to connect behavior change with incentives for their participants and the reason behind that is obvious. I think it’s also what drives interest in us because our engagement is exceptional and as is the case with Humana now we’re plugged into their integrated wellness offering and that’s clearly an attempt to use our engagement and their broad wellness platform to improve the health and improve the healthy behaviors of their populations.

And this agreement seemed to come before open enrollment. Does Humana -- has Humana agreed at all to do any kind of marketing to their members to talk about this new program, this new service?

Yeah Humana has been a consistent innovator and they are aggressively looking at the relationship with Weight Watchers as an internal value creator for their members and so they are communicating it, they’re marketing behind it, they are using their coaches and nurses to promote the penetration of this partnership. So yeah they are fully behind us strategically would be my characterization.

Okay, great. Thank you very much.

The next question comes from R.J. Hottovy of Morningstar.

Thanks, had a bigger picture question here and Jim I appreciate the color on the consumer changes that you’re seeing in that weight management is becoming a part of a holistic approach that includes fitness. In that context have you thought of any changes, any broader brand changes or any kind of strategies to outline as you see changes in consumer environment does the brand also need to change?

Yes, I think we have said RJ that one of our key strategic planks is repositioning the brand. There are a lot of fantastic things about this brand, but there are things that we could do to bring it more on trend and put it in a different context. I think the research that I was referencing was getting more crystalline about what that context is. So between the brand positioning and the product strategy, I think you will see the Weight Watchers brand showing up differently going forward.

Thanks. Had a follow-up question on the Humana relationship and really just kind of looking forward here you mentioned during the prepared remarks about investing in the healthcare business in step with demand and just kind of curious what the pipeline might look like in terms of the healthcare and demand and whether or not Humana partnership might open up some newer potential relationships down the road?

Well, we’re focused on making Humana a success. We have for a year now probably, don’t hold me to that exact number but for quite some time consistently referred to getting a partner in 2015 and we are looking at and we are going to focus on their success. I believe that, that success will put Weight Watchers in a good light relative to the rest of the industry but that is our priority.

RJ it’s Nick. The only thing I would add to that obviously the health plan space is important for us. We continue to focus on strategic accounts business adding customers every quarter, signed up Aon Nova [ph] recently for example and so it’s relatively a small piece of our portfolio, less than $30 million but it’s forecast to grow at double-digit this year. I think overall if you go back to our Investor Day we laid out a goal to get healthcare up to be a $300 million business by 2019. It is still a very important strategic process for us, the opportunity there is as much as we ever thought it was. So realistically getting to that $300 million goal is going to be deferred beyond 2018 unless the trends change.

That was actually my next question so, thanks.

The next question comes from Jerry Herman at Stifel.

Hi, guys good evening, everybody. Jim I thought I would just ask a different spin on the 3% penetration question. You guys now have effectively four product offerings let’s say. Can you give us an idea what that mix looks like and also help us maybe connect [ph] with the average selling price and what that’s done given that changes?

No, in terms of the mix of this business, if you look at how our businesses are performing, Jerry, probably what’s hurting our profitability this year is that the online business is declining for a second year with revenue down by about the same magnitude as last year. That’s why we are clearly focused on adding value to the online offering through the click to chat and the personal coaching offerings. But as we said we will be focusing on growing our meetings business also.

So the 3% represents the percentage of all subscribers, is that correct that are using coaching?

That’s the percentages of people that are selecting personal coaching. That’s the new recruits that have chosen personal coaching since the start of the year. I would like to stress we talked about mass marketing being important for this business also. As you know Jerry kind of key to a successful, so word of mouth and that is why we are very pleased with the great response rate we are getting from people who are trying personal coaching. We are getting excellent feedback on the product, as Jim mentioned 90% really like it. So that’s why we feel we have got a good platform on which to build.

And just a general question about guidance, we should assume that the inflection in new enrollment in 2015 is much a tougher challenge at this point, is that correct or off the table completely?

No, look I would say to you look at the range of our guidance, $0.40 to $0.70. We are going to move fast and get the cost savings in any scenario. So the variability in our guidance is more driven by the top line, at the low end that assumes really a continuation of the type of recruitment trends we saw during 2014. At the high end it assumes some modest improvement versus what we are currently experiencing, that’s driving the high end of the guidance. We’ll get to positive recruitments as soon as we can, maybe towards the end of this year and may wait until winter diet [ph] is in ’16 but importantly as Jim’s outlined our strategies are the same. We know what we have to do get there.

And probably just one last question I will turn it over, if you look at your subscriber base of 2.5 million is there any way to calibrate the percentage or number of those users that sort of fall into the category of an exceptionally loyal Weight Watchers user that have recurred and returned? And really the basis of that question is there some level of volume that you represent or you believe is sort of foundational volume that volume you can depend on?

I think the recurring nature of our business model has always been a factor. So kind of the mix of new versus re-joins hasn’t changed materially. I think history has shown that even folks who have done Weight Watchers before are more likely to come back when we have great new program news and market it well and we’re confident that can continue to drive the business in the future.

I think you could say there is a foundational behavior around returning to Weight Watchers as the program that worked. Putting a number on that as far as percentage of people I don’t have to guess for that but certainly that behavior amidst consumers engaging with the chronic condition and trying multiple things, whether it’s Do-it-Yourself programs, whether it’s other activities the sentiment coming back to Weight Watchers being a fully integrated program that really does work and really does generate results that is a consistent theme.

Great, thanks guys. I will turn it over.

This concludes our question-and-answer session and the conference is also now concluded. Thank you for attending today’s event. You may now disconnect.