Nutrisystem 2007 Annual Report Download - page 20

Expansion into international markets may expose us to economic, political and social risks in the countries
in which we operate.
In January 2008, we expanded operations into Canada and expect to enter the United Kingdom and Japan by
2009. This expansion may be costly as we will be required to divert management time and resources and it could
require us to adapt our program to conform to local cultures. We may not be successful in expanding into
particular international markets and this expansion could expose our financial results to additional risks in the
countries in which we operate. Financial results could be adversely affected by changes in foreign currency rates,
changes in worldwide economic conditions, changes in trade policies or tariffs and political unrest.
Future acquisitions and the pursuit of new business opportunities present risks, and we may be unable to
achieve the financial and strategic goals of any acquisition or new business.
A component of our growth strategy may be to acquire existing businesses or pursue other business
opportunities in the market for weight management and fitness products and services. Even if we succeed in
acquiring or building such businesses, we will face a number of risks and uncertainties, including:
• difficulties in integrating newly acquired or newly started businesses into existing operations, which
may result in increasing operating costs that would adversely affect our operating income and earnings;
• the risk that our current and planned facilities, information systems, personnel and controls will not be
adequate to support our future operations;
• diversion of management time and capital resources from our existing businesses, which could
adversely affect their performance and our operating results;
• dependence on key management personnel of acquired or newly started businesses and the risk that we
will be unable to integrate or retain such personnel;
• the risk that the new products or services we may introduce or begin offering, whether as a result of
internal expansion or business acquisitions, will not gain acceptance among consumers and existing
customers;
• the risk that new efforts may have a detrimental effect on our brand;
• the risk that we will face competition from established or larger competitors in the new markets we
may enter, which could adversely affect the financial performance of any businesses we might acquire
or start; and
• the risk that the anticipated benefits of any acquisition or of the commencement of any new business
may not be realized, in which event we will not be able to achieve any return on our investment in that
new business.
If we do not continue to receive referrals from existing customers, our customer acquisition cost may
increase.
We rely on word-of-mouth advertising for a portion of our new customers. If our brand suffers or the
number of customers acquired through referrals drops due to other circumstances, our costs associated with
acquiring new customers and generating revenue will increase, which will, in turn, have an adverse affect on our
profitability.
We use spokespersons to promote our products. If these spokespersons suffer adverse publicity, our
revenue could be adversely affected.
Our marketing strategy depends in part on celebrity spokespersons, as well as customer spokespersons to
promote our weight management program. Any of these spokespersons may become the subject of adverse news
reports, negative publicity or otherwise be alienated from a segment of our customer base, whether weight loss
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