WeightWatchers 2002 Annual Report Download - page 8

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PART I
Item 1. Business
We are a leading global branded consumer company and the leading provider of weight-loss
services, operating in 30 countries around the world. Our programs help people lose weight and
maintain their weight loss and, as a result, improve their health, enhance their lifestyles and build
self-confidence. At the core of our business are weekly meetings, which promote weight loss through
education and group support in conjunction with a flexible, healthy diet. Each week, over 1.5 million
people attend approximately 44,000 Weight Watchers meetings around the world, which are run by over
15,400 classroom leaders. Our classroom leaders teach, inspire, motivate and act as role models for our
members.
We conduct our business through a combination of company-owned and franchise operations, with
company-owned operations accounting for approximately 67% of total worldwide attendance in 2002.
In the 1960’s, we pursued an aggressive franchising strategy with respect to our classroom operations to
rapidly grow our geographic presence and build market share. We believe that our early franchising
strategy was very effective in establishing our brand as the world’s leading weight-loss program.
We have experienced strong growth in sales and profits over the last six years since we made the
strategic decision to re-focus our meetings exclusively on our group education approach. We
discontinued the in-meeting sale of pre-packaged frozen meals added in 1990 in North American
company-owned, or NACO, operations, by our previous owner, H.J. Heinz Company, or Heinz. We
also modernized our program to adapt it to contemporary lifestyles. Through these initiatives,
combined with our strengthened management and strategic focus since our acquisition by Artal
Luxembourg, we have grown our attendance.
Our members typically enroll to attend consecutive weekly meetings and have historically
demonstrated a consistent re-enrollment pattern across many years. We believe that our members’
repeat enrollment and attendance patterns and our large existing member base together with our
growth in first-time members represent strong potential for future growth. We also believe that we can
expand our customer base by developing new products and services designed to meet the needs of a
broader audience.
Our Billion Dollar Brand
Weight Watchers is the leading global weight-loss brand with retail sales of $2.0 billion in 2002,
including sales by licensees and franchisees. Currently, over 97% of U.S. women recognize the Weight
Watchers brand.
We have built our business and brand on the following core principles:
Effective Clinically proven
Healthy Medically recommended
Supportive Helping members help each other
Flexible Compatible with modern lifestyles
Balanced Not just a diet, an approach to life
Weight Watchers Meetings
We present our program in a series of weekly classes of approximately one hour in duration.
Classes are conveniently scheduled throughout the day. Typically, we hold classes in either meeting
rooms rented from civic or religious organizations or in leased locations.
In our classes, our leaders present our program, which combines group support and education with
a structured approach to food, activity and lifestyle modification developed by credentialed weight-loss
1