WeightWatchers 2004 Annual Report Download

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THE WORLD'S TRUSTED NAME IN WEIGHT LOSS
Annual Report 2004

Table of contents

  • Page 1
    THE WORLD'S TRUSTED NAME IN WEIGHT LOSS Annual Report 2004

  • Page 2
    ... board member of the National Business Group on Health's Institute on the Costs and Health Effects of Obesity, an organization that strives to help corporate America tackle obesity in the workplace. In 2004, Weight Watchers collaborated on the production of a guidebook entitled, "Guide to Starting...

  • Page 3
    ... weight-loss services is growing and that people from all walks of life are searching for weight-loss solutions. Our Program works and we have hundreds of thousands of Lifetime Members to prove it. Only Weight Watchers offers the sustainable solution for weight loss based on group support, behavior...

  • Page 4
    ... the TurnAroundâ„¢ program in North America, further customizing our food plans to the needs of our members. We expanded our brand's reach through several food product licensing agreements. We extended our outreach to employers and their employees through our Corporate Solutions offerings. And, we...

  • Page 5
    ... licensing agreements in the United States with a number of noted consumer products companies, including Organic Milling, Wells Dairy, Weston Bakery, and Dawn Foods. These new Weight Watchers branded products, complete with low POINTS® values, include a variety of ice cream treats, breads, snack...

  • Page 6
    ...to the member experience, and newly licensed products, as well as through brand building and motivational marketing strategies. We believe we are taking the right steps to support our brand and enhance our growth potential over the long term. We will never waiver from our commitment to offer healthy...

  • Page 7
    ... market value, as determined by the last sale price of $38.53 on the New York Stock Exchange, of the voting stock held by non-affiliates (shareholders holding less than 5% of the outstanding Common Stock, excluding directors and officers), as of July 2, 2004 was $1,222,084,445. The number of shares...

  • Page 8

  • Page 9
    ...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...

  • Page 10
    ...can range from dealing with a holiday office party to making time to exercise. The leader encourages substantial class participation and discusses supporting products and materials as appropriate. At the end of the class, new members are given special instruction in our current weight-loss plan. Our...

  • Page 11
    ..., our program is based on POINTS values that take into account the type and amount of exercise done and allow members to use those POINTS values as part of their menu planning. Our United States members currently receive ''Get Moving,'' which is designed to promote exercise and activity outside of...

  • Page 12
    ... targets self-help dieters. Our Corporate Solutions line of weight-loss offerings also includes prepaid local meeting coupons, Weight Watchers online subscriptions and the At Home kit. Product Sales We sell a range of proprietary products, including snack bars, books, CD-ROMS and POINTS calculators...

  • Page 13
    ...global brand, Weight Watchers is a powerful marketing tool for us and for third parties. We currently license our Weight Watchers brand in certain categories of food, books and other products. This year, for example, we introduced Weight Watchers branded meal, snack and dessert products developed in...

  • Page 14
    ... it even easier to follow our food programs and by reinforcing our weight-loss approach between meetings. During July 2002 and September 2002, WeightWatchers.com launched an upgrade to its United Kingdom and Canadian web sites, including the offering of two online paid subscription products. In...

  • Page 15
    ...re-enroll. Pricing Structure and Promotions Our most popular payment structure is a ''pay-as-you-go'' arrangement. Typically, a new member pays an initial registration fee and then a weekly fee for each class attended, although free registration is often offered as a promotion. Our Value plan in the...

  • Page 16
    ...The website contributes value to our classroom business by promoting our brand, advertising Weight Watchers classes and keeping members involved with the program outside the classroom through useful offerings, such as a meeting locator, low calorie recipes, weight-loss news articles, success stories...

  • Page 17
    ...to the initial success then experienced by some of our competitors who focused on meal replacements. These changes forced our classroom leaders to become food sales people and retail managers for food products, detracting from their function as role models and motivators for our members. This caused...

  • Page 18
    ... applicable country regarding the offer and sale of franchises, the content of advertising and the promotion of diet products and programs. Most recently with the passage of the Sarbanes-Oxley Act of 2002 in the United States, we have, like other publicly listed companies, been subject to additional...

  • Page 19
    ... currently headquartered in Woodbury, New York in a leased office that is scheduled to expire in 2005. In anticipation of the expiration of this lease, on October 3, 2004, we entered into an eight-year lease agreement to relocate our corporate headquarters to New York City. Weight Watchers Magazine...

  • Page 20
    ...Item 5. Market for Registrant's Common Stock, Related Shareholder Matters and Issuer Purchases of Equity Securities Weight Watchers common stock is listed on the New York Stock Exchange or the NYSE. The common stock trades on the NYSE under the symbol ''WTW.'' Prior to our initial public offering on...

  • Page 21
    ... Eight Months Ended December 30, 2000 (35 Weeks) January 1, 2005 Fiscal Years Ended January 3, December 28, 2004 2002 December 29, 2001 Fiscal Year Ended April 29, 2000 Revenues, net ...Net income ...Working capital (deficit) . Total assets ...Long-term obligations . . Earnings per share: Basic...

  • Page 22
    ... 1, 2002, we acquired the assets of our franchises in San Diego and eastern North Carolina for a total purchase price of $11.0 and $10.6 million, respectively. These acquisitions were financed through cash from operations. The acquisitions were accounted for as purchases and, accordingly, earnings...

  • Page 23
    ...a one-time reversal (credit) of the remaining balance of the valuation allowance of $71.9 million. Acquisition of Weighco. On January 16, 2001, we acquired the franchised territories and certain business assets of Weighco for an aggregate purchase price of $83.8 million. The acquisition was financed...

  • Page 24
    ... Product sales. We sell proprietary products that complement our program, such as snack bars, books, CD-ROMs and POINTS calculators, to our members and franchisees. • Franchise royalties. Our franchisees typically pay us a royalty fee of 10% of their meeting fee revenues. • Online subscription...

  • Page 25
    ... accordance with accounting principles generally accepted in the United States of America (''U.S. GAAP''). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure...

  • Page 26
    ...under the Weight Watchers name, collecting royalties related to licensing agreements and selling advertising space in and copies of our magazine. We charge non-refundable registration fees in exchange for an introductory information session and materials we provide to new members. Revenue from these...

  • Page 27
    ... and statement of cash flows include the results of WeightWatchers.com. All intercompany balances have been eliminated in consolidation. Income Taxes Deferred income taxes result primarily from temporary differences between financial and tax reporting. If it is more likely than not that some portion...

  • Page 28
    ... the year increases by $16.0 million after incremental marketing expenses of $14.6 million and selling, general and administrative expenses of $9.3 million. A scheduled loan repayment of $4.9 million and interest income of $2.2 million, which Weight Watchers International earned from WeightWatchers...

  • Page 29
    ... by international attendance growth and more favorable foreign currency rates, partially offset by a decline in North America attendance. On a worldwide basis, company-owned attendance declined 1.5%. Compared to the prior year, classroom meeting fees increased $21.9 million, licensing revenues rose...

  • Page 30
    ... increase in net revenues is a benefit of approximately $42.5 million from foreign currency exchange rates. On a local currency basis, meeting fees and product sales in our international operations increased 5.4%. For the year ended January 1, 2005, total classroom meeting fees were $629.1 million...

  • Page 31
    ... off of unamortized debt issuance costs of $4.4 million and $0.4 million of fees associated with the transaction. Our effective tax rate for the year ended January 1, 2005 was 36.1% as compared to 38.0% for the year ended January 3, 2004. We recorded a tax benefit in the third quarter of 2004 by...

  • Page 32
    ... were an $8.0 million rise in magazine advertising revenues and publishing royalties, a $4.2 million increase in licensing revenue and $2.9 million higher royalties earned from our WeightWatchers.com license. Cost of revenues was $440.4 million for the fiscal year ended January 3, 2004, an increase...

  • Page 33
    ... as compared to 2002 resulted primarily from factors relating to the timing of our Fall 2003 NACO innovation. These included significant expenses in the third quarter 2003 relating to the nationwide innovation training meetings held with our meeting room staff, the write-off of some unused program...

  • Page 34
    ... effective tax rate in the year ended January 3, 2004. LIQUIDITY AND CAPITAL RESOURCES Impact of FIN 46R The Balance Sheet and Cash Flow tables below remove the impact of FIN 46R from our 2004 consolidated balances, and compare the stand-alone balances of Weight Watchers International for 2004 with...

  • Page 35
    ... $770.7 $ (4.7) 3.8 (9.1) (10.0) (0.7) 62.2 (26.0) $ 25.5 Total assets ...Accounts payable and accrued liabilities ...Deferred revenue ...Current portion of long-term debt ...Long term debt ...Other ...Total liabilities ...Shareholders' equity ...Total liabilities and shareholders' equity ... 122...

  • Page 36
    ... recording WeightWatchers.com's retained deficit through the 2004 fiscal year as well as adjustments to reinstate the remaining principal of the $34.5 million loan formerly written off by Weight Watchers International and to reverse the resultant tax benefit that had been recorded. Cash Flow As...

  • Page 37
    ... for meeting locations and information system expenditures. Long-Term Debt Our Credit Facility (as defined in Note 6 to the Consolidated Financial Statements), as amended, consists of Term Loans and a revolving line of credit (the ''Revolver''). Our total debt outstanding was similar year-over-year...

  • Page 38
    ... currently anticipated capital expenditure requirements, debt service requirements and working capital requirements. Acquisitions On May 9, 2004, we completed the acquisition of certain assets of our Washington, D.C. area franchise for a purchase price of $30.5 million that was financed through cash...

  • Page 39
    ... advertising spending. Our operating income for the first half of the year is generally the strongest. WEIGHTWATCHERS.COM Our affiliate and licensee, WeightWatchers.com, has the exclusive right to operate the Weight Watchers web site and markets two online paid subscription products, Weight Watchers...

  • Page 40
    ... 123R eliminates the option of using the intrinsic value method to record compensation expense related to stock-based awards to employees and instead requires companies to recognize the cost of such awards based on their grant-date fair value over the related service period of such awards. We will...

  • Page 41
    ... Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures...

  • Page 42
    ... internal control over financial reporting of WeightWatchers.com. As of and for the year ended January 1, 2005, Weight Watchers International, Inc.'s consolidated financial statements include total assets and total revenues of 3.8% and 6.8%, respectively, related to WeightWatchers.com. The Company...

  • Page 43
    ...also a director of WeightWatchers.com, Inc. Ann M. Sardini. Ms. Sardini has served as our Chief Financial Officer since April 2002 when she joined our company. Ms. Sardini has over 20 years of experience in senior financial management positions in branded media and consumer products companies. Prior...

  • Page 44
    ... of Weight Watchers International, and the online presence for the Weight Watchers brand. He held that position since February 2000 and during that time, WeightWatchers.com grew from a start up to almost $80 million in annual revenues in 2003 and has become a leader in online weight loss. Prior...

  • Page 45
    ... since November 2002. Since 1999, he has been a director of the Wm. Wrigley Jr. Company, where he served as Executive Vice President from 1999 to 2000, Senior Vice President from 1990-1999, and at the same time serving as Chief Financial Officer from 1990 until his retirement from management in 2000...

  • Page 46
    ..., Inc. Board of Directors Our Board of Directors is currently comprised of nine directors. Classes and Terms of Directors Our Board of Directors is divided into three classes, equal in number, with each director serving a three-year term and one class being elected at each year's annual meeting of...

  • Page 47
    ... the Board of Directors in its oversight of the integrity of our financial statements; • to review our annual and quarterly financial statements prior to their filing or prior to the release of earnings; • to oversee the performance of the Company's independent registered public accounting firm...

  • Page 48
    ... combination of cash and equity-based awards. This approach results in overall compensation levels that follow our financial performance. Our Compensation and Benefits Committee reviews each senior executive officer's base salary annually. In determining appropriate base salary levels, consideration...

  • Page 49
    ....12(a) of the NYSE Listed Company Manual. In addition, the Company has filed as exhibits to this annual report, the applicable certifications of our Chief Executive Officer and our Chief Financial Officer required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, regarding the quality of...

  • Page 50
    ... 28, 2002 the compensation paid to our President and Chief Executive Officer and to each of the next four most highly compensated executive officers whose total annual salary and bonus was in excess of $100,000. Summary Compensation Table Long-Term Compensation Awards(6) Restricted Securities...

  • Page 51
    ...Weight Watchers International Option Grants For the Fiscal Year Ended January 1, 2005 Individual Grants Percent of Total Options Granted to Employees in Fiscal Year Ended January 1, 2005(2) Name Number of Securities Underlying Options Granted(1) Exercise or Base Price (per share) Expiration Date...

  • Page 52
    ...January 1, 2005 Individual Grants Percent of Total Options Granted to Employees in Fiscal Year Ended January 1, 2005(2) Name Number of Securities Underlying Options Granted(1) Exercise or Base Price (Per Share) Expiration Date Grant Date Present Value(3) Ann M. Sardini ... 11,385 50.0% $7.14...

  • Page 53
    ...- - - - - - (*) The value of WeightWatchers.com options are not currently calculable as the underlying securities are not publicly traded. Director Compensation Our executive director and our directors who are associated with The Invus Group do not receive compensation. Mr. Reed, Ms. Evans and Mr...

  • Page 54
    ..., the average annual bonus actually earned by the executive in respect of the three full fiscal years prior to the year in which the notice of termination is given) under our bonus plan; (ii) A lump sum cash payment equal to the sum of (w) the executive's unpaid base salary and vacation days accrued...

  • Page 55
    ... the performance targets established under our bonus plan for such fiscal year as of the date of termination, the executive's actual annual bonus payable under our bonus plan based upon such achievement (this pro rata portion in either case calculated from January 1 of such year through the date of...

  • Page 56
    ... our chief executive officer and each of the named executive officers, (3) each director and (4) all directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. In computing the number of shares beneficially...

  • Page 57
    ..., Boston, MA 02109. (3) Our executive officers and directors may be contacted c /o Weight Watchers International, Inc., 175 Crossways Park West, Woodbury, New York, 11797. (4) Includes shares subject to purchase upon exercise of options exercisable within 60 days after January 1, 2005, as follows...

  • Page 58
    ...summarizes our equity compensation plan information as of January 1, 2005. Equity Compensation Plan Information Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights Number of securities...

  • Page 59
    ... in any of these activities. Under the corporate agreement, if one of our officers or directors who also serves as an officer, director or advisor of Artal Luxembourg becomes aware of a potential transaction related primarily to the group education-based weight-loss business that may represent...

  • Page 60
    ...distributing on the Internet of information relating to our products and services such as classroom meetings, the Weight Watchers Magazine and At Home and similar products and services from our affiliates and franchisees; and • customer communication services, which include establishing a means by...

  • Page 61
    We are required to pay for all expenses incurred by WeightWatchers.com directly attributable to the services it performs under this agreement, plus a fee of 10% of those expenses. In fiscal 2004 and 2003, service fees incurred by Weight Watchers International to WeightWatchers.com were $2.3 million ...

  • Page 62
    ... 15. Exhibits and Financial Statement Schedule 1. Financial Statements The financial statements listed in the Index to Financial Statements and Financial Statement Schedule on page F-1 are filed as part of this Form 10-K. 2. Financial Statement Schedule The financial statement schedule listed in the...

  • Page 63
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Items 15(a) 1&2 Pages Consolidated Balance Sheets at January 1, 2005 and January 3, 2004 ...Consolidated Statements ...

  • Page 64
    ... EQUITY CURRENT LIABILITIES Portion of long-term debt due within one year Accounts payable ...Salaries and wages ...Other accrued liabilities ...Income taxes payable ...Deferred income taxes ...Deferred revenue ...TOTAL CURRENT LIABILITIES ...Long-term debt ...Deferred income taxes ...Other ...TOTAL...

  • Page 65
    ... 3, 2004 (53 Weeks) December 28, 2002 (52 Weeks) Meeting fees, net ...Product sales and other, net ...Online subscription fees ...Revenues, net ...Cost of meetings, products and other ...Cost of online subscriptions ...Cost of revenues ...Gross profit ...Marketing expenses ...Selling, general and...

  • Page 66
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) (IN THOUSANDS) Accumulated Other Retained Deferred Comprehensive Earnings Compensation Income (Loss) (Deficit) $ - $(13,323) Common Stock Treasury Stock Shares Amount Shares ...

  • Page 67
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE FISCAL YEARS ENDED (IN THOUSANDS) January 1, 2005 (52 Weeks) Operating activities: Net income ...Adjustments to reconcile net income to cash provided Cumulative effect of accounting change ......

  • Page 68
    ... notes is used to indicate Weight Watchers International and its majority-owned subsidiaries. The term ''the Company'' as used throughout these notes is used to indicate WWI as well as WeightWatchers.com. WWI operates and franchises territories offering weight loss and control programs through the...

  • Page 69
    ... eliminated in consolidation. Use of Estimates: The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the...

  • Page 70
    ... at cost. For financial reporting purposes, equipment is depreciated on the straight-line method over the estimated useful lives of the assets (3 to 10 years). Leasehold improvements are amortized on the straight-line method over the shorter of the term of the lease or the useful life of the related...

  • Page 71
    ... under the Weight Watchers name, collecting royalties related to licensing agreements and selling advertising space in and copies of its magazine. WWI charges non-refundable registration fees in exchange for an introductory information session and materials it provides to new members. Revenue from...

  • Page 72
    ...$13,723 of WeightWatchers.com advertising costs), $107,931 and $78,293, respectively. Income Taxes: The Company provides for taxes based on current taxable income and the future tax consequences of temporary differences between the financial reporting and income tax carrying values of its assets and...

  • Page 73
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2. Summary of Significant Accounting Policies (Continued) Deferred Financing Costs: Deferred financing costs consist of fees paid by the Company as ...

  • Page 74
    ... 3, 2004 December 28, 2002 Net income, as reported ...Deduct: Total stock-based employee compensation expense determined under the fair value method for all stock options awards, net of related tax effect ...Pro forma net income ...Earnings per share: Basic-as reported ...Basic-pro forma ...Diluted...

  • Page 75
    ... the Company completed the acquisition of certain assets of its Washington, D.C. area franchisee, F-W Family Corporation (d/b/a Weight Watchers of Washington, D.C.), for a purchase price of $30,500, which was financed through cash from operations, plus assumed liabilities of $348. The total purchase...

  • Page 76
    ... to the terms of an Asset Purchase Agreement executed on March 31, 2003 among the WW Group, The WW Group East L.L.C., The WW Group West L.L.C., Cuida Kilos, S.A. de C.V., Weight Watchers North America, Inc. and the Company. The purchase price for the acquisition was $180,700 plus assumed liabilities...

  • Page 77
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 4. Goodwill and Other Intangible Assets (Continued) subsidiaries. The goodwill balance increased during the fiscal year ended January 3, 2004 ...

  • Page 78
    ... 28, 2002 was $6,661 (including $1,088 for depreciation of assets of WeightWatchers.com) $4,832 and $3,788, respectively. 6. Long-Term Debt The Company's long-term debt is entirely attributable to WWI. WeightWatchers.com does not have any credit facilities. The components of long-term debt are as...

  • Page 79
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 6. Long-Term Debt (Continued) On April 1, 2003, in connection with the acquisition of certain assets of the WW Group, WWI borrowed $85,000 under a new...

  • Page 80
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 6. Long-Term Debt (Continued) Due to the early extinguishment of the Term Loans resulting from the January 2004 refinancing, the Company recognized ...

  • Page 81
    ... quarter 2002, and cash from operations. 8. Treasury Stock On October 9, 2003, the Company, at the direction of WWI's Board of Directors, authorized a program to repurchase up to $250,000 of the Company's outstanding common stock. The repurchase program allows for shares to be purchased from time...

  • Page 82
    ...2004 Plan'') and the 1999 Stock Purchase and Option Plan (the ''1999 Plan'') of WWI. These plans are designed to promote the long-term financial interests and growth of WWI by attracting and retaining management with the ability to contribute to the success of the business. The Board of Directors or...

  • Page 83
    ... of the 1999 Plan, the Board of Directors authorized the Company to enter into agreements under which certain members of management received Non-Qualified Time and Performance Stock Options providing them the opportunity to purchase shares of WWI's common stock at an exercise price of $2.13 to...

  • Page 84
    ..., the Board of Directors of WWI adopted the WeightWatchers.com Stock Incentive Plan of Weight Watchers International, Inc. and Subsidiaries, pursuant to which selected employees were granted options to purchase shares of common stock of WeightWatchers.com that are owned by WWI. The number of shares...

  • Page 85
    ... a risk-free interest rate of 4.1%. The following table summarizes information about stock options outstanding under the WeightWatchers.com Stock Incentive Plan at January 1, 2005 by range of exercise price: Options Outstanding Weighted Average Weighted Remaining Average Shares Contractual Exercise...

  • Page 86
    ... weighted average assumptions: (a) dividend yield of 0%, (b) volatility of 64%, (c) risk-free interest rate of 3.0%-3.9% and (d) expected term of 5 years. 11. Income Taxes Although consolidated for financial reporting purposes under FIN 46R, WWI and WeightWatchers.com are separate tax paying...

  • Page 87
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 11. Income Taxes (Continued) The difference between the U.S. federal statutory tax rate and the Company's consolidated effective tax rate are as ...

  • Page 88
    ... names in electronic media in connection with its online weight-loss business. The license agreement provides WWI with control of how its intellectual property is used. In particular, WWI has the right to approve WeightWatchers.com's e-commerce activities, marketing programs, privacy policy and...

  • Page 89
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 12. Related Party Transactions (Continued) December 28, 2002 include all the income/(expense) resulting from WWI's activities with WeightWatchers.com ...

  • Page 90
    ... 28, 2002 was $1,808, $1,655 and $1,560, respectively. For certain senior management personnel of WWI, the Company sponsors the Weight Watchers Executive Profit Sharing Plan. Under the Internal Revenue Service (''IRS'') definition, this plan is considered a Nonqualified Deferred Compensation Plan...

  • Page 91
    ...for this plan in the consolidated financial statements. 14. Cash Flow Information January 1, 2005 January 3, 2004 December 28, 2002 Net cash paid during the year for: Interest expense ...Income taxes ...Noncash investing and financing activities were as follows: Fair value of net assets acquired in...

  • Page 92
    ... two reportable operating segments: Weight Watchers International and WeightWatchers.com, its affiliate and licensee. Since these are two separate and distinct businesses, the financial information for each company is maintained and managed separately. The results of operations and assets for each...

  • Page 93
    ... CONSOLIDATED FINANCIAL STATEMENTS (Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 16. Segment and Geographic Data (Continued) Information about the Company's reportable operating segments is as follows: Year Ended January 1, 2005 Weight Watchers International Weight Watchers.com Intercompany...

  • Page 94
    ...long-term debt, current and noncurrent notes receivable, currency exchange agreements. In evaluating the fair value of significant financial instruments, the Company generally uses quoted market prices of the same or similar instruments or calculates an estimated fair value on a discounted cash flow...

  • Page 95
    ... the next three years. At January 1, 2005, given the current configuration of its debt, the Company estimates that no derivative gains or losses reported in accumulated other comprehensive income (loss) will be reclassified to the Statement of Operations within the next twelve months. As of January...

  • Page 96
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS 18. Quarterly Financial Information (Unaudited) The following is a summary of the unaudited quarterly consolidated results of operations for the fiscal...

  • Page 97
    ... Weight Watchers International Inc.'s 2004 consolidated financial statements and of its internal control over financial reporting as of January 1, 2005 and audits of its 2003 and 2002 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board...

  • Page 98
    ...internal control over financial reporting. As of and for the year ended January 1, 2005, Weight Watchers International, Inc.'s consolidated financial statements include total assets and total revenues of 3.8% and 6.8%, respectively, related to WeightWatchers.com. PricewaterhouseCoopers LLP New York...

  • Page 99
    SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (IN THOUSANDS) Additions Balance at Charged to Charged Balance at Beginning Costs and to Other End of Period Expenses Accounts(2) Deductions(1) of Period FISCAL YEAR ENDED JANUARY 1, Allowance for doubtful accounts ...Inventory reserves, ...

  • Page 100
    ... Exhibit Number Description **2.1 - Recapitalization and Stock Purchase Agreement, dated July 22, 1999, among Weight Watchers International, Inc., H.J. Heinz Company and Artal International S.A. is incorporated herein by reference to Exhibit 2 filed with the Registrant's Registration Statement on...

  • Page 101
    ...Group, LLC is incorporated herein by reference to Exhibit 10.14 filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended December 28, 2002. **10.12 - Agreement of Lease, dated as of August 1, 1995, between Industrial & Research Associates Co. and Weight Watchers International...

  • Page 102
    ... Watchers Executive Profit Sharing Plan, dated as of October 4, 1999 is incorporated herein by reference to Exhibit 10.18 filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended April 29, 2000. **10.17 - 1999 Stock Purchase and Option Plan of Weight Watchers International...

  • Page 103
    ...'s Registration Statement on Form S-1 (File No. 333-69362) as filed on October 29, 2001. **10.36 - Form of Continuity Agreement, dated as of October 10, 2003, between Weight Watchers International, Inc. and certain key executives (Chief Executive Officer, Chief Financial Officer and General Counsel...

  • Page 104
    Exhibit Number Description *23.1 *31.1 *31.2 ***32.1 ***32.2 - Consent of Registered Public Accounting Firm. - Rule 13a-14(a) Certification by Linda Huett, President and Chief Executive Officer. - Rule 13a-14(a) Certification by Ann M. Sardini, Chief Financial Officer. - Certification pursuant to...

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    ... Exchange Act of 1934, the registrant has duly caused this report to be signed on his behalf by the undersigned, thereunto duly authorized. WEIGHT WATCHERS INTERNATIONAL, INC. DATE: MARCH 17, 2005 BY: /S/ LINDA HUETT Linda Huett President, Chief Executive Officer and Director (Principal Executive...

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    ... Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: March 17, 2005 By: /s/ LINDA HUETT Linda Huett President, Chief Executive Officer and Director (Principal Executive Officer) Date...

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    ... PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-74066) of Weight Watchers International, Inc. of our report dated March 11, 2005 relating to the financial statements, financial statement schedule, management's assessment...

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    ... information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 17, 2005 Signature: /s/ LINDA HUETT Linda Huett President, Chief Executive Officer and Director...

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    ... I, Ann M. Sardini, Chief Financial Officer of Weight Watchers International, Inc., certify that: 1. 2. I have reviewed this annual report on Form 10-K of Weight Watchers International, Inc.; Based on my knowledge, this annual report does not contain any untrue statement of a material fact or...

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    ...-OXLEY ACT OF 2002 In connection with the Annual Report of Weight Watchers International, Inc. (the ''Company'') on Form 10-K for the year ending January 1, 2005 as filed with the Securities and Exchange Commission on the date hereof (the ''Report''), I, Linda Huett, Chief Executive Officer of the...

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    ...OXLEY ACT OF 2002 In connection with the Annual Report of Weight Watchers International, Inc. (the ''Company'') on Form 10-K for the year ending January 1, 2005 as filed with the Securities and Exchange Commission on the date hereof (the ''Report''), I, Ann M. Sardini, Chief Financial Officer of the...

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    ..., Garden City, NY 11530 on Friday, April 29, 2005, at 10 a.m. eastern time. Corporate Headquarters Weight Watchers International, Inc. 175 Crossways Park West Woodbury, NY 11797-2055 www.weightwatchersinternational.com Common Stock New York Stock Exchange Symbol: WTW Shareholder Relations Robert...

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    Weight Watchers Magazine is published in many countries around the world. Here are some examples. The United States version is in the center. Also featured are Germany, Finland, France, Netherlands, Australia and England. WWA-AR-05