Nutrisystem 2008 Annual Report Download - page 10

Download and view the complete annual report

Please find page 10 of the 2008 Nutrisystem annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 76

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76

our clients. Renowned fitness experts Leslie Sansone and Vaughn Hebron have added to the heart benefits of
NutriSystem Advanced by creating exercise DVDs exclusively for NutriSystem Advanced participants. The
Results Kit also offers a customized meal planner, online community access information, a Quick Start Guide
and more.
In July 2008, we acquired certain assets of Power Chow, LLC (d/b/a NuKitchen) (“NuKitchen”), a provider
of premium, fresh prepared meals designed to promote weight management and healthy living. NuKitchen
provides a full menu of fresh, restaurant-quality prepared meals delivered daily to customers and will expand our
product offerings, menu selection and price points. Even though this offering is currently only available in New
York City, it provided us the opportunity to enter the fresh delivery market and we believe the business has the
potential to target a higher-end, consumer segment.
In November 2008, we announced that we had entered into an agreement with Schwan’s Home Service, a
provider of fine frozen foods, for the development and distribution of frozen foods under the NutriSystem
brand. The new program, which includes frozen foods (“NutriSystem®Select™”) will enhance NutriSystem’s
tradition of effective weight loss and weight management. The full national launch of NutriSystem Select took
place in the first quarter of 2009. The new program will provide customers with premium fresh-frozen foods that
complement NutriSystem’s prepared food weight loss programs and still adheres to NutriSystem’s nutritional
guidelines. When a customer orders NutriSystem Select, two separate shipments will be delivered. The second
shipment will contain the fresh-frozen foods and will be delivered right to the customer’s home by Schwan’s
Home Service.
Additionally, we introduced the Flex program (“NutriSystem Flex”), which is a new 28-day program
consisting of 20 days of food, our “weekends off” program, which will provide a less restrictive option to meet
the needs and lifestyle of an important segment of dieting consumers. NutriSystem Flex includes a Recipe Book
(My NutriSystem, My Way™) and a Dining Out Guide to help consumers make healthy choices and stay within
the program guidelines on their “weekend” days. We also announced in January 2009 that we had agreed to offer
our program at Costco Wholesale Corp.’s warehouse club outlets in the U.S. (“Costco”) through the use of
prepaid program cards. Customers redeem the prepaid card online at our website and then the product is shipped
to the customer.
Typically, our customers purchase monthly food packages of shelf-stable food containing 28 breakfasts,
lunches, dinners and desserts, which they supplement with fresh dairy, fruit, salad, vegetables and low-glycemic
carbohydrate items. In certain instances, depending on the promotional offers available, customers can receive
more than the typical 28 days of food. Most customers order on an auto-delivery basis in which we send food to
the customers on a monthly basis until notified by the customer to stop shipments. Our program is currently
priced for as little as $3 per meal. The food is shelf-stable at room temperature, making it relatively inexpensive
to ship and store. On our website, customers can order food 24 hours a day, seven days a week.
The features of our weight loss program address many of the most common limitations of traditional weight
loss programs, including high initiation and recurring membership fees, the inconvenience of traveling to weight
loss centers for scheduled appointments and lack of privacy. In addition, our prepared meals provide our
customers with a structured program in which they do not have to weigh or measure foods or count calories,
carbohydrates or points.
Our food items have accounted for 99% of our revenues for each of the years ended December 31, 2008,
2007 and 2006, respectively. No other product or service has accounted for more than 1% of consolidated
revenue in any of the last three years. In January 2008, we expanded operations into Canada. Approximately 98%
of our revenues for the year ended December 31, 2008 were generated in the United States.
6