Good afternoon, and welcome to the Weight Watchers International Second Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. 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, Laura, and thank you to everyone for joining us today for Weight Watchers International's second quarter 2015 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 4:00 o'clock p.m. Eastern Time today, the company issued a press release reporting the fiscal 2015 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 a 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? James R. Chambers - President, Chief Executive Officer & Director: Thanks, Corey. Good afternoon, everyone, and thank you for joining us for today's call. Our second quarter…

Thanks, Jim, and good afternoon everyone. As Jim discussed our Q2 results demonstrated a marked improvement in the recruitment trajectory as compared to our first quarter, especially in online. While total recruits remained negative the overall trend improved substantially versus Q1, especially in North America, where online recruitments comped positively for the quarter year over year. In Q2 total company revenue declined 16.5% on a constant currency basis to $310 million. And we delivered adjusted operating income of $71 million. GAAP EPS was $0.49. Excluding modest restructuring costs and a $0.07 gain as a result of our debt tender offer, adjusted EPS was $0.42 per share. Turning now to our results by geographic segment. In the second quarter total North America revenues declined 18.4%, with meeting fees down 17.8% and online revenue down 17.5%, all on a constant currency basis. Meetings paid weeks declined 18.3% and online paid weeks declined 22%. On a constant currency basis in the UK second quarter total revenue was down 17.4%, with meeting fees down 16.5% and online revenues down 15.5%. Meetings paid weeks declined 15.4% and online paid weeks declined 17.7%. In Continental Europe total revenues declined 9.1%, with online revenue down 8.3% and meeting fees down 11.7%, all on constant currency. Online paid weeks decreased 8.5% and meetings paid weeks declined 9.8%. Now to the P&L detail on an adjusted basis. In the second quarter gross margin was 51.3%, representing a decline from the prior year of 590 basis points on a constant currency basis. Our marketing spend was $40.3 million, declining $2.5 million on constant currency. G&A expenses were $47.9 million, a decline of $11.4 million on constant currency as we continued to exercise stringent cost discipline across the organization. Our GAAP Q2 tax rate was 40.2%. And now, I'd like to…

Thank you. We will now begin the question-and-answer session And our first question will come from Meredith Adler of Barclays.

Hello. Thanks very much for taking my question. I guess I wanted to understand a little bit better how you think about this new program and maybe how you think customers or consumers are going to respond to it? What does your focus group say? And how long do you think it will take for people to really understand the changes you've made? James R. Chambers - President, Chief Executive Officer & Director: So, Meredith, I think I can answer some of that. But as I said there's certain details around the commercial plan that we won't touch on. I think that consumers are going to understand this and align with this quickly. What we've done is a deep understanding of where they are. So we're not creating something new for them. We're meeting the key needs that they have described in how they want food to represent healthy eating to them and not simply calories. And how they want to integrate fitness into their lives and how they want to find the strength to sign up and to continue in these kinds of holistic improvement efforts. So I think it's going to be a pretty smooth uptake from that perspective. In our testing, which is happening in a slightly different model this year than last year. This year we're developing in a much more iterative way. So we have more testing and we have earlier testing of things. We've had very positive responses to the elements that we have changed at a program level. So we're feeling quite confident about that as well.

Okay great. And then maybe I'm just curious to know what kind of feedback you've gotten from customers about the changes you've already made in how they can connect with Weight Watchers? And is everything working the way you wanted it to? James R. Chambers - President, Chief Executive Officer & Director: So the – are you referring to the capabilities we put in place at the beginning of this year around...

Yes, yes. James R. Chambers - President, Chief Executive Officer & Director: ...bringing the leaders in contact with the member population?

That's right. James R. Chambers - President, Chief Executive Officer & Director: So in – I'll take that in two pieces I guess. The first has to do with our Click to Chat functionality that we've put into the product, and the second has to do with Coaching, which we launched as a product. So from a Click to Chat perspective I think it's one of the things that represents the improvement in our digital product suite in addition to some of the other things I mentioned on the call, like search and navigation. But I think it's the access to leaders in the digital product is one of the things that has improved its performance. And while we have a lot to learn and a lot to improve like any launch and product evolution, I think that has strengthened those products. With respect to Coaching we see pretty much the same thing that I referenced on the last call that the continuance of people being highly satisfied with the interaction with Weight Watchers Coaches in that one-on-one model, but still low penetration of Coaching as a product. And while we work on testing ways to improve that penetration, we're really excited about the fundamental – the building block dimension of this, which is that the core strategy of getting the coaches to interact in the digital realm with Weight Watchers' members is creating resonance and is improving things. So, a lot to do to drive the penetration of that product over time, but also suggest ways that we can use Coaching as an activity in different ways to strengthen our offerings overall.

Great. Thank you very much.

And the next question comes from R.J. Hottovy of Morningstar.

Yes, thanks. Had another question about the program innovation that you're planning. And Jim, I appreciate you not wanting to give too many details about the platform. But given that you've said that it ties into the idea that consumers want a more holistic approach to wellness and fitness and that Weight Watchers being a key component of that, just trying to get a sense of what – how this – what shape this program takes and how you fully address the other parts of the holistic approach that you don't actively have a competency in such as the fitness and wellness, whether this means exploring other options or other partnerships, or just other ways, how you offer a more complete solution, any details that you could give us that would be helpful? And then additionally, is there any other additional cost required with this – with this platform? James R. Chambers - President, Chief Executive Officer & Director: Yeah, I think unfortunately, your question's right down the middle of the fairway of details around the program that I don't really want to address too deeply. We do – of course had development costs associated with the program and testing costs associated with the program. I've referenced the technology approach to how we are building it. And I'll say we will continue to, as I mentioned to Meredith, we will continue to leverage the strategy of increasing the presence of our service providers into the digital realm, but I can't give too much more detail than that.

Yeah, R.J., I'll just talk to the cost of a program a little bit. Obviously last year, we introduced the strategic capabilities that Jim mentioned. And within our 525 basis points of gross margin deterioration, probably around 100 basis point of that is added delivery cost associated with bringing our service provider to the online space, obviously that's in the past. In the forecast for 2015 that we've shared today, the move from a 450 prior gross margin deterioration guidance to 525 now, that's primarily driven by the one-time costs linked to the introduction of our winter season innovation, including training of service providers and supporting materials and supporting technologies, so, the costs to launch are certainly all baked into our guidance.

Thanks. Second question I had just is regarding the healthcare initiatives, and just whether or not – what kind of ideas you have and what the pipeline looks beyond Humana and any other ideas and in terms of how you go about finding your healthcare partners and what they're saying on that end. And then also if you have – now that you're beyond six months with the platform with Humana, any kind of statistics on the members that you've been able to enroll through Humana. Any retention rates or anything like that, any details that you could share with us on that end that, that would be helpful. Thanks. James R. Chambers - President, Chief Executive Officer & Director: Sure. So, our work with Humana, as you mentioned, started about six months ago when we kicked off. And our primary focus has been around improving our operational capabilities to meet what the healthcare channel requires in terms of privacy and data management and reporting and things of that nature. It's important to note that we have only recently dug into turning on the marketing effort. So we're switching the focus from proving out the operations to engaging their populations and we're working with them on how best to do that. Overall, I would say from 18 months ago, maybe even a little more when we started talking about the healthcare initiative, the one thing that has proven to be a bit different is how the interpretation of the regulations have unfolded. So as the – as we believe that we meet the requirements for the USPSTF's recommendation around intensive behavioral counseling and therefore should be covered, the interpretation of plans in the health channel, their interpretations have been much slower to evolve, and frankly, there has been quite a bit of confusion around what this means and who meets these requirements. So overall, I think this has made it a little more difficult for us to develop a pipeline quickly, but hasn't lowered our expectation for what this can do for us over time and how important a role we can play in that healthcare system. In 2016, I would say that it's probably another learning year for us with smaller number of partners as we continue to influence folks and prove to them that we meet the requirements and continuing to push our strength as a broad scale-based, cost-effective and highly, from a weight loss perspective, efficacious provider. And we'll just keep those strengths in mind as we continue to develop the channel.

Thanks for the color.

Our next question will come from Alex Christensen of Craig-Hallum.

Hey guys. Looks like you guys had a good quarter, especially the way that the market is responding this afternoon. I just had a couple questions for you guys. The first one, the thing that struck me was – it looks like sequentially, even despite not being the peak of diet season, your active subscribers in North America grew. And so, I was wondering what kind of – what you're taking from that, what specifically with your promos was strong and how you're going to integrate that into next diet season? James R. Chambers - President, Chief Executive Officer & Director: So that's – I'll take this from the point of reference around what specifically drove the improved performance and particularly in North America. I think I had mentioned before that our digital products fundamentally are getting better. They're getting stronger. But to add to this, our advertising and promotion efforts in the North American markets were stronger. We combined the "Lose 10 lbs on us" promotion with a return to I'll call it the tactics from a media perspective that have been proven in the category, which are based more on call to action advertising and higher levels of GRP. So we've changed up our media mix. We've changed up the creative. We integrated a promotion that has a lot of leverage at the consumer level. And I think that is what has improved the trend fundamentally. With respect to the promotion I mentioned "Lose 10 lbs on us." It has been a good performer for us and it works at a couple of levels. It works like the rest of our promotions have. It works at a fundamental economic level that encourages participation. But it also had some pretty good kind of behavioral influences on the consumer. It created a buzz and a more sharable construct that this was new from Weight Watchers. And it has created a different kind of invitation to Weight Watchers. I think consumers have seen us, always given us the due credit for being an effective weight loss program, but seen us maybe a bit more about transformation. And this was an invitation as I mentioned. It was "Lose 10 lbs". It seemed doable. It seemed inviting. It was something that wasn't as off-putting. And so we found it had a very strong effect. So we ran that promotion on the signup dimensions of web and mobile obviously, but we also integrated into the television advertising and digital. And it had a much better than the trend we had been seeing. It had a pretty strong impact. So I think that is the biggest driver.

Okay. Great. I mean that's very helpful. Another question, looking at – I know you guys have talked in the past about as volumes decrease a little bit in your weight loss centers. You're consolidating two meetings into one so that you can save on expenses there. How is that going? Have you seen success in keeping a critical mass in those meetings?

Yeah. No. As part of our $100 million cost saving strategy, and you see the impact of that demonstrated in the year-over-year decreases in marketing and G&A. But operating efficiencies and meeting consolidations are an important part of that strategy also, and the teams executing that strategy well. Now obviously despite all those great efforts, still see gross margin deteriorating 525 basis points this year. That's primarily driven by the volume impact and the fact that as I mentioned we added some cost to this system for Click to Chat. But we're comfortable that as we return to recruitment growth in 2016, we've got a optimized meeting network to take advantage of that growth.

Great. Thanks, James. Thanks, Nick.

The next question will come from John Faucher of JPMorgan.

Thank you. Just want to follow up on sort of the effectiveness of the promotion with a couple of questions here, which is you guys have been talking to your consumers a lot lately. And I guess is this something – taking the price points down, what have you, is it not something that had come up in all the research that you guys have been doing with your consumers? And then I guess as you look at sort of the consumers you've brought in, when is it the right time to know whether they are going to stay. Right? So you brought them in for what is a shorter-term promotion. What – how long before you know whether they will stick with you over the longer term? And then I guess the third question here would be – and I apologize for asking three questions at one time. If this is working why not amp up the marketing behind this promotion instead of taking the marketing spending down over the balance of the year? Thanks. James R. Chambers - President, Chief Executive Officer & Director: So let me see if I can try the first couple in a general sense. So, having been around and worked in a number of categories, one of the things that has really been impactful about this category is when we promote, we have very profitable returns on that promotion. I've been in businesses where that's not the case. And so, the range of things we do is within a context of, number one, they're all – they're all pretty profitable events. With respect to price, in talking to our consumers, I think price in this category has an economic effect like it does in other categories. But it's not a very rational category…

Yeah, let me just add to that, John. On pricing, a declining gross margin this year, it's all about volume and it's all about investments in the business. So, the overwhelming driving factor is meetings, deleverage. So, frankly, within that 525 basis points of gross margin deterioration, just want to stress that the total impact of pricing and promotion for the year is positive 20 basis points. So, our price realization in the business is higher than it was in 2014, partly because of the price increases we took in North America, but that's being followed up with the strategic use of promotions as we've discussed. And then importantly, we track the behavior of people on the program very closely. And whether or not somebody joins our program for a one-month or three-months sign-up initially, whether or not they're joining, they're going to "Lose 10 lbs on us" promotion or Free Starter Kit offer or a "Bring a Friend" promotion on the meetings business, we're pleased with our retention trends in all aspects of the business that we see, and haven't seen any meaningful impact in our retention trends.

Got it. Thank you.

And that concludes our question-and-answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.