\begin{tabular}{lrrrrr} & 2018 & 2017 & 2016 & 2015 & 2014 \\ Total revenue & $1,514 & $1,307 & $1,165 & $1,164 & $1,480 \\ Cost of goods sold & 648 & 614 & 579 & 590 & 677 \\ Gross profit & 866 & 693 & 586 & 574 & 803 \\ Operating expenses: & 648 & 412 & 385 & 406 & 529 \\ Operating income & 389 & 281 & 201 & 168 & 273 \\ Interest expense & 142 & 123 & 115 & 122 & 123 \\ Income before taxes & 244 & 145 & 84 & 56 & 158 \\ Provision for income taxes & 20 & -18 & 17 & 23 & 59 \\ Net income from continuing operations & 224 & 163 & 67 & 33 & 99 \\ Net income & $224 & $163 & $68 & $33 & $99 \\ Earnings per share & 3.19 & 2.40 & 1.06 & 0.56 & 1.74 \end{tabular} \begin{tabular}{|c|c|c|c|c|c|} \hline Long-term debt & 1,670 & 1,741 & 1,981 & 2,021 & 2,334 \\ \hline Deferred taxes & & & 175 & 160 & 172 \\ \hline Other long-term liabilities & 209 & 174 & 30 & 28 & 22 \\ \hline Total liabilities & 2,220 & 2,258 & 2,474 & 2,680 & 2,905 \\ \hline \multicolumn{6}{|l|}{ Stockholders' equity: } \\ \hline Retained earnings & 2,382 & 2,203 & 2,057 & 1,995 & 1,883 \\ \hline Treasury stock & (3,191) & (3,219) & (3,237) & (3,247) & (3,254) \\ \hline Other comprehensive income & (16) & (10) & (27) & (37) & (20) \\ \hline Total shareholder's equity & (1,770) & (1,973) & (1,208) & (1,290) & (1,390) \\ \hline \end{tabular} customers to stay with the program long after they had achieved their target weight. However, this rebranding campaign, launched in the fall of 2018, only confused customers. The timing of this new message, just before the crucial holiday diet season, made it seem as if Weight Watchers was abandoning its core weight loss mission. 5 In her announcement of the disappointing fourth quarter and full year 2018 results, CEO Grossman said the following: While we are disappointed with our start to 2019 , we are confident that our strategy to focus on providing holistic wellness solutions leveraging our best-in-class weight management program is the right path to support longterm sustainable growth. Looking ahead, I'm happy to say that Oprah Winfrey will play a central role in our upcoming TV and digital marketing campaign for spring, bringing to life a clear message on how WW is the program that works. Together with Oprah, we are also working on an initiative to galvanize and bring together communities through a series of digital and live experiences and events to accelerate WW's impact and allow us to reach new and diverse audiences. We will announce more details in the coming months, but anticipate the initiative will kick off later in 2019.6 Although Weight Watchers had been working to update its image and offerings and was still able to boast a high gross profit margin, it seemed revenue and cash generation as well as the firm's growth strategy had not been able to fully inspire either investor or customer confidence. Clearly, Weight Watchers was in trouble. In April 2019, Weight Watchers (WW) launched a new marketing campaign called "It Works!" This promotional plan featured media mogul Oprah Winfrey encouraging WW members to celebrate their weight loss. The only problem was investors perceived this promotional push as too little, too late. WW had posted disappointing fiscal thirdand fourth-quarter reports, missing estimates and reporting a decline in its subscriber base, which had fallen to 3.9 million from 4.2 million in the fall of 2018. In addition, WW saw expected 2019 revenue at $1.4 billion, down from the reported $1.5 billion in 2018 , and projected earnings per share of $1.25 to $1.50, much worse than the $3.19 reported at year end. 1 Could the involvement of Oprah Winfrey turn this performance around? Winfrey had started investing in Weight Watchers in October 2015, paying about $43 million to obtain an approximately 10 percent stake in the company. Three months later, in January 2016, she reported she was able to lose 26 pounds with the help of the program. Then in early 2017, the Weight Watchers "Beyond the Scale" advertising campaign featured Winfrey claiming that she had lost 40 pounds. Winfrey endorsed the Weight Watchers experience by emphasizing "It Works!"2 However, investors did not buy it: just saying "it works" did not seem to be inspiring "increasingly distracted and skeptical customers." Winfrey's involvement, the advertising campaigns, and discount offers in 2018 were all part of a rebranding effort that ultimately had failed to impress investors. The price of Weight Watchers shares (ticker symbol: WTW) had been tumbling since its high point in 2011 and 2012. 4 This price decline echoed the financial reality: seven straight quarters of declining sales that had not started to reverse until mid2018. What had gone wrong? \begin{tabular}{|c|c|c|c|c|c|} \hline & 2018 & 2017 & 2016 & 2015 & 2014 \\ \hline \multicolumn{6}{|l|}{ Assets } \\ \hline \multicolumn{6}{|l|}{ Current assets: } \\ \hline Cash and cash equivalents & $237 & $83 & $109 & $242 & $301 \\ \hline Net receivables & 27 & 24 & 28 & 29 & 32 \\ \hline Inventory & 26 & 32 & 33 & 28 & 32 \\ \hline Other current assets & 34 & 43 & 36 & 15 & 38 \\ \hline Total current assets & 366 & 209 & 235 & 351 & 428 \\ \hline Gross property plant and equipment & & & 205 & 202 & 204 \\ \hline Accumulated depreciation & & & (155) & (144) & (130) \\ \hline Net property, plant and equipment & 52 & 48 & 50 & 58 & 75 \\ \hline Goodwill & 152 & 156 & 166 & 159 & 107 \\ \hline Intangible assets & 808 & 801 & 807 & 814 & 868 \\ \hline Other long-term assets & 35 & 32 & 13 & 32 & 38 \\ \hline Deferred LT asset charges & 16 & 12 & & & \\ \hline Total assets & 1,415 & 1,246 & 1,271 & 1,422 & 1,515 \\ \hline \multicolumn{6}{|l|}{ Current liabilities: } \\ \hline Short/current debt & 83 & 95 & 53 & 258 & 24 \\ \hline Accounts payable & 27 & 24 & 41 & 38 & 54 \\ \hline Accrued liabilities & 101 & 99 & 136 & 146 & 125 \\ \hline Deferred revenue & 54 & 74 & 63 & 62 & 66 \\ \hline Other current liabilities & 76 & 51 & & & \\ \hline Total current liabilities & 341 & 343 & 292 & 503 & 377 \\ \hline \end{tabular} Weight Watchers had undergone some internal changes, starting with the resignation of CEO David Kirschoff in 2013. Kirschoff had presided over the firm during its most profitable years, yet his replacement, John Chambers, had been unable to reverse what appeared to be an inevitable decline and left WW in 2016. This left the firm without a full-time CEO until April 2017 when Weight Watchers named Mindy Grossman as President and CEO. One of Grossman's strategies was to rebrand the company-turning "Weight Watchers" into "WW" in an attempt to "embrace wellness," or encourage its \begin{tabular}{lrrrrr} & 2018 & 2017 & 2016 & 2015 & 2014 \\ Net income & $224 & $163 & $67 & $33 & $99 \\ Depreciation & 44 & 51 & 53 & 53 & 49 \\ Amortization deferred financing costs & 8 & 6 & 6 & 7 & 9 \\ Impairment of assets & 27 & 752 & 615 & 2 & 27 \\ Share-based compensation expense & 20 & 15 & 7 & 25 & 11 \\ Deferred tax provision & (14) & (48) & 11 & - & 22 \\ Inventory & (1) & (5) & (10) & (3) & (3) \\ Prepaid expenses & (4) & (4) & (15) & (18) & (1) \\ Accounts payable & 2 & (15) & 0 & 14 & (10) \\ Accrued liabilities & 17 & 4 & (9) & 31 & 10 \\ Income taxes payable & 27 & 4 & - & - & 1 \\ Other working capital & - & - & 0 & (7) & (4) \\ Other non-cash items & - & - & 18 & 8 & (4) \\ Net cash provided by operating activities & 296 & 222 & 119 & 55 & 323 \\ Investment in property, equipment and plan & (46) & (41) & (34) & (36) & (52) \\ Acquisitions & (7) & 0 & (3) & (3) & (17) \\ Other investing activities & (10) & (1) & 0 & (1) & (1) \\ Net cash provided by investment activities & (64) & (41) & (38) & (40) & (38) \\ Debt issued & - & 1,840 & - & 48 & - \\ Debt repayment & (58) & (2,019) & (165) & (158) & (30) \\ Common stock issued & - & - & - & 41 & - \\ Common stock repurchased & - & - & - & - & - \end{tabular} \begin{tabular}{lrrrrr} Dividend paid & - & - & (0) & (0) & (0) \\ Other, financing activities & (17) & (32) & (47) & 0 & 1 \\ Net cash provided by financing activities & (75) & (211) & (212) & (69) & (29) \\ Effects of exchange rate & (4) & 4 & (2) & (6) & (7) \\ Net change in cash & 154 & (25) & (131) & (60) & 127 \\ Cash at beginning of period & 83 & 109 & 242 & 301 & 175 \\ Cash at end of period & $237 & $3 & $109 & $242 & $301 \end{tabular} \begin{tabular}{lrrrrr} & 2018 & 2017 & 2016 & 2015 & 2014 \\ Total revenue & $1,514 & $1,307 & $1,165 & $1,164 & $1,480 \\ Cost of goods sold & 648 & 614 & 579 & 590 & 677 \\ Gross profit & 866 & 693 & 586 & 574 & 803 \\ Operating expenses: & 648 & 412 & 385 & 406 & 529 \\ Operating income & 389 & 281 & 201 & 168 & 273 \\ Interest expense & 142 & 123 & 115 & 122 & 123 \\ Income before taxes & 244 & 145 & 84 & 56 & 158 \\ Provision for income taxes & 20 & -18 & 17 & 23 & 59 \\ Net income from continuing operations & 224 & 163 & 67 & 33 & 99 \\ Net income & $224 & $163 & $68 & $33 & $99 \\ Earnings per share & 3.19 & 2.40 & 1.06 & 0.56 & 1.74 \end{tabular} \begin{tabular}{|c|c|c|c|c|c|} \hline Long-term debt & 1,670 & 1,741 & 1,981 & 2,021 & 2,334 \\ \hline Deferred taxes & & & 175 & 160 & 172 \\ \hline Other long-term liabilities & 209 & 174 & 30 & 28 & 22 \\ \hline Total liabilities & 2,220 & 2,258 & 2,474 & 2,680 & 2,905 \\ \hline \multicolumn{6}{|l|}{ Stockholders' equity: } \\ \hline Retained earnings & 2,382 & 2,203 & 2,057 & 1,995 & 1,883 \\ \hline Treasury stock & (3,191) & (3,219) & (3,237) & (3,247) & (3,254) \\ \hline Other comprehensive income & (16) & (10) & (27) & (37) & (20) \\ \hline Total shareholder's equity & (1,770) & (1,973) & (1,208) & (1,290) & (1,390) \\ \hline \end{tabular} customers to stay with the program long after they had achieved their target weight. However, this rebranding campaign, launched in the fall of 2018, only confused customers. The timing of this new message, just before the crucial holiday diet season, made it seem as if Weight Watchers was abandoning its core weight loss mission. 5 In her announcement of the disappointing fourth quarter and full year 2018 results, CEO Grossman said the following: While we are disappointed with our start to 2019 , we are confident that our strategy to focus on providing holistic wellness solutions leveraging our best-in-class weight management program is the right path to support longterm sustainable growth. Looking ahead, I'm happy to say that Oprah Winfrey will play a central role in our upcoming TV and digital marketing campaign for spring, bringing to life a clear message on how WW is the program that works. Together with Oprah, we are also working on an initiative to galvanize and bring together communities through a series of digital and live experiences and events to accelerate WW's impact and allow us to reach new and diverse audiences. We will announce more details in the coming months, but anticipate the initiative will kick off later in 2019.6 Although Weight Watchers had been working to update its image and offerings and was still able to boast a high gross profit margin, it seemed revenue and cash generation as well as the firm's growth strategy had not been able to fully inspire either investor or customer confidence. Clearly, Weight Watchers was in trouble. In April 2019, Weight Watchers (WW) launched a new marketing campaign called "It Works!" This promotional plan featured media mogul Oprah Winfrey encouraging WW members to celebrate their weight loss. The only problem was investors perceived this promotional push as too little, too late. WW had posted disappointing fiscal thirdand fourth-quarter reports, missing estimates and reporting a decline in its subscriber base, which had fallen to 3.9 million from 4.2 million in the fall of 2018. In addition, WW saw expected 2019 revenue at $1.4 billion, down from the reported $1.5 billion in 2018 , and projected earnings per share of $1.25 to $1.50, much worse than the $3.19 reported at year end. 1 Could the involvement of Oprah Winfrey turn this performance around? Winfrey had started investing in Weight Watchers in October 2015, paying about $43 million to obtain an approximately 10 percent stake in the company. Three months later, in January 2016, she reported she was able to lose 26 pounds with the help of the program. Then in early 2017, the Weight Watchers "Beyond the Scale" advertising campaign featured Winfrey claiming that she had lost 40 pounds. Winfrey endorsed the Weight Watchers experience by emphasizing "It Works!"2 However, investors did not buy it: just saying "it works" did not seem to be inspiring "increasingly distracted and skeptical customers." Winfrey's involvement, the advertising campaigns, and discount offers in 2018 were all part of a rebranding effort that ultimately had failed to impress investors. The price of Weight Watchers shares (ticker symbol: WTW) had been tumbling since its high point in 2011 and 2012. 4 This price decline echoed the financial reality: seven straight quarters of declining sales that had not started to reverse until mid2018. What had gone wrong? \begin{tabular}{|c|c|c|c|c|c|} \hline & 2018 & 2017 & 2016 & 2015 & 2014 \\ \hline \multicolumn{6}{|l|}{ Assets } \\ \hline \multicolumn{6}{|l|}{ Current assets: } \\ \hline Cash and cash equivalents & $237 & $83 & $109 & $242 & $301 \\ \hline Net receivables & 27 & 24 & 28 & 29 & 32 \\ \hline Inventory & 26 & 32 & 33 & 28 & 32 \\ \hline Other current assets & 34 & 43 & 36 & 15 & 38 \\ \hline Total current assets & 366 & 209 & 235 & 351 & 428 \\ \hline Gross property plant and equipment & & & 205 & 202 & 204 \\ \hline Accumulated depreciation & & & (155) & (144) & (130) \\ \hline Net property, plant and equipment & 52 & 48 & 50 & 58 & 75 \\ \hline Goodwill & 152 & 156 & 166 & 159 & 107 \\ \hline Intangible assets & 808 & 801 & 807 & 814 & 868 \\ \hline Other long-term assets & 35 & 32 & 13 & 32 & 38 \\ \hline Deferred LT asset charges & 16 & 12 & & & \\ \hline Total assets & 1,415 & 1,246 & 1,271 & 1,422 & 1,515 \\ \hline \multicolumn{6}{|l|}{ Current liabilities: } \\ \hline Short/current debt & 83 & 95 & 53 & 258 & 24 \\ \hline Accounts payable & 27 & 24 & 41 & 38 & 54 \\ \hline Accrued liabilities & 101 & 99 & 136 & 146 & 125 \\ \hline Deferred revenue & 54 & 74 & 63 & 62 & 66 \\ \hline Other current liabilities & 76 & 51 & & & \\ \hline Total current liabilities & 341 & 343 & 292 & 503 & 377 \\ \hline \end{tabular} Weight Watchers had undergone some internal changes, starting with the resignation of CEO David Kirschoff in 2013. Kirschoff had presided over the firm during its most profitable years, yet his replacement, John Chambers, had been unable to reverse what appeared to be an inevitable decline and left WW in 2016. This left the firm without a full-time CEO until April 2017 when Weight Watchers named Mindy Grossman as President and CEO. One of Grossman's strategies was to rebrand the company-turning "Weight Watchers" into "WW" in an attempt to "embrace wellness," or encourage its \begin{tabular}{lrrrrr} & 2018 & 2017 & 2016 & 2015 & 2014 \\ Net income & $224 & $163 & $67 & $33 & $99 \\ Depreciation & 44 & 51 & 53 & 53 & 49 \\ Amortization deferred financing costs & 8 & 6 & 6 & 7 & 9 \\ Impairment of assets & 27 & 752 & 615 & 2 & 27 \\ Share-based compensation expense & 20 & 15 & 7 & 25 & 11 \\ Deferred tax provision & (14) & (48) & 11 & - & 22 \\ Inventory & (1) & (5) & (10) & (3) & (3) \\ Prepaid expenses & (4) & (4) & (15) & (18) & (1) \\ Accounts payable & 2 & (15) & 0 & 14 & (10) \\ Accrued liabilities & 17 & 4 & (9) & 31 & 10 \\ Income taxes payable & 27 & 4 & - & - & 1 \\ Other working capital & - & - & 0 & (7) & (4) \\ Other non-cash items & - & - & 18 & 8 & (4) \\ Net cash provided by operating activities & 296 & 222 & 119 & 55 & 323 \\ Investment in property, equipment and plan & (46) & (41) & (34) & (36) & (52) \\ Acquisitions & (7) & 0 & (3) & (3) & (17) \\ Other investing activities & (10) & (1) & 0 & (1) & (1) \\ Net cash provided by investment activities & (64) & (41) & (38) & (40) & (38) \\ Debt issued & - & 1,840 & - & 48 & - \\ Debt repayment & (58) & (2,019) & (165) & (158) & (30) \\ Common stock issued & - & - & - & 41 & - \\ Common stock repurchased & - & - & - & - & - \end{tabular} \begin{tabular}{lrrrrr} Dividend paid & - & - & (0) & (0) & (0) \\ Other, financing activities & (17) & (32) & (47) & 0 & 1 \\ Net cash provided by financing activities & (75) & (211) & (212) & (69) & (29) \\ Effects of exchange rate & (4) & 4 & (2) & (6) & (7) \\ Net change in cash & 154 & (25) & (131) & (60) & 127 \\ Cash at beginning of period & 83 & 109 & 242 & 301 & 175 \\ Cash at end of period & $237 & $3 & $109 & $242 & $301 \end{tabular}