Nutrisystem 2010 Annual Report Download - page 8

Special Note Regarding Forward-Looking Statements
Except for the historical information contained herein, this Annual Report (“Report”) on Form 10-K
contains certain forward-looking statements that involve substantial risks and uncertainties. Words such as
“may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”
“continue,” or similar words are intended to identify forward-looking statements, although not all forward-
looking statements contain these words. Our actual results, performance or achievements could differ materially
from the results expressed in, or implied by, these forward-looking statements. Factors that could cause or
contribute to such differences include those set forth in “Risk Factors.” Accordingly, there is no assurance that
the results in the forward-looking statements will be achieved.
PART I
ITEM 1. BUSINESS
Overview
We are a leading provider of a weight management system based on a low-calorie, portion-controlled,
prepared meal program. Typically, our customers purchase monthly food packages containing a 28-day supply of
breakfasts, lunches, dinners and desserts, which they supplement with dairy, fruit, salad, vegetables and
low-glycemic carbohydrate items. Most of our customers order on an auto-delivery basis (“Auto-Delivery”), in
which we send a month’s food supply on an ongoing basis until notified by the customer to stop our shipments.
Our Core Auto-Delivery program is regularly priced between $300 and $330 per shipment, or about $11 to $12
per day for a full 28 days of Nutrisystem ready-to-go food. Our food for the Core program is shelf-stable at room
temperature and will last for up to two years, making it relatively inexpensive to ship and store. We have also
expanded our product offerings to include a combination of our ready-to-go food and our fresh-frozen line of
menu items. This new Select program is priced higher than the Core program.
Our program is based on the following cornerstones that represent who we are to our customers:
Results. We believe our program enables our customers to lose weight successfully. The Nutrisystem
program is based on over 35 years of nutrition research and the science of the low Glycemic Index, and offers
over 150 low-calorie, portion-controlled items that are high in fiber, heart healthy and contain “good”
carbohydrates and zero trans fats. The Glycemic Index is a measure of the quality of carbohydrates in foods.
Foods on the lower end of the Glycemic Index are generally considered “good” carbohydrates.
Convenience. We sell our weight management programs primarily through a direct-to-consumer sales and
distribution approach using the Internet and telephone. Our customers can order 24 hours a day, seven days a
week on our website, www.nutrisystem.com, and the food is shipped directly to the customer’s door.
Simplicity. We provide a comprehensive weight management program, consisting of a pre-packaged food
program and counseling. Our customers can either choose our pre-selected favorites food package or customize
their monthly food orders for their specific tastes. There are no center visits, no measuring foods and no counting
calories.
Value. Our Core Auto-Delivery program is regularly priced at about $11 to $12 per day for a full 28 days of
Nutrisystem food. We do not charge membership fees. Additionally, we advertise various promotional offers and
pricing throughout the year.
Anonymity. The direct-to-consumer approach using the Internet provides the privacy that our customers
value. We provide online and telephone counseling and support to our customers using our trained weight loss
coaches, diet counselors and other nutrition and dietary staff resulting in no need to travel for a face-to-face
meeting.
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