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Weight Watchers International's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Global combined paid weeks were up 11% in Q2 2012 versus the same period last year. Global meeting paid weeks were down 4.7% in Q2 while global paid weeks for our online product were up 30%. For Q2 2012 our operating income margin was effectively flat to prior. While gross margin was up 1.5 percentage points, marketing as percentage of revenue was up 1.8 percentage points primarily reflecting continued investment and driving awareness of our Weight Watchers online product.

G&A, as a percentage of revenue, was close to flat versus prior. Q2 2012 EPS was $1.36 compared to $1.17 for the same period in 2011 benefitting from a share repurchases earlier this year. We experienced about $0.06 of unfavorable Forex impact in the second quarter of this year versus prior.

I will now briefly review our results on our major geographies and business units. First, our North American meeting business. Total make on revenue, which includes the U.S. and Canada in Q2 2012 was down 6.1% on a constant currency basis versus the same period in 2011, a slight improvement over the -8.9% result for the first quarter.

(inaudible) meeting fees declined 6.3% and meeting product sales declined 7.5% versus the prior year quarter driven entirely by attendance volume declines as product sales per attendance grew 2.7%.

NACO Q2 2012 paid weeks declined 5.5% while attendance has declined 9.9% versus a prior year period. As was the case in Q1, the material portion of the volume shortfall was a result of the continued impact of the execution issues we had earlier this year and the small accounts portion of our corporate business.

Excluding the corporate business, NACO paid weeks and attendances in the second quarter were down an estimated 3.6% and 7.4%, respectively. In reviewing the NACO results I will first provide an update on the status of our efforts to address the issues and the small accounts corporate business.

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