WeightWatchers 2006 Annual Report Download - page 51

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2004 which, as mentioned above, was not included in the consolidated results for the full fiscal year 2004), a
$21.5 million increase in licensing revenues, and a $10.8 million increase in product sales. Due to the timing of
the adoption of FIN 46R, our fiscal 2004 consolidated results included one quarter of WeightWatchers.com
royalty income of $2.0 million. Included in the $126.4 million increase in net revenues is a benefit of
approximately $3.8 million from foreign currency exchange rates.
For fiscal 2005, total meeting fees were $681.1 million, an increase of $52.0 million, or 8.3%, from
$629.1 million in fiscal 2004. Total attendances increased 1.7% reaching 60.9 million versus 59.9 million in the
prior year period. Meeting fee growth outpaced attendance growth primarily as a result of price increases in
NACO and the United Kingdom.
In NACO, meeting fees for fiscal 2005 were $417.0 million, up 11.8% from $373.1 million in the prior
fiscal year. NACO meeting fee growth was primarily driven by a price increase in approximately 40% of NACO
for the full year of fiscal 2005, and an additional approximately 20% of NACO beginning in September 2005;
and by a 3.5% increase in NACO attendance over the comparable prior year period.
International company-owned meeting fees were $264.2 million for fiscal 2005, an increase of $8.2 million,
or 3.2%, from $256.0 million for fiscal 2004. International meeting fee growth was primarily driven by
attendance and meeting fee per attendee growth in Continental Europe, and by a price increase in the United
Kingdom. On a local currency basis, international meeting fee revenues grew 3.5%. Meeting fee growth in the
United Kingdom was negatively impacted due to lower attendances of 3.1%, decreasing from 13.0 million in
fiscal 2004 to 12.6 million in fiscal 2005.
Worldwide product sales for fiscal 2005 were $285.4 million, an increase of $10.8 million, or 3.9%, from
$274.6 million for fiscal 2004. Domestically, product sales rose $6.0 million, or 4.3%, to $144.4 million in fiscal
2005, despite the stronger growth in sales that occurred in the third quarter of fiscal 2004 related to the launch of
the TurnAround innovation in NACO as is typical with a new innovation. Domestic product sales grew 9.7% in
the first half of fiscal 2005 and 13.5% in the fourth quarter of fiscal 2005 primarily as a result of refreshing our
in-meeting consumables and adding new offerings which have been well received. Internationally, product sales
increased 3.5%, or $4.8 million, to $141.1 million, also on the strength of new product introductions.
Online revenues were $109.7 million for fiscal 2005 as compared to $65.0 million in fiscal 2004 which
included only nine months of WeightWatchers.com results due to the timing of our adoption of FIN 46R. Growth
in online revenues from the second to the fourth quarter of fiscal 2005 period versus the comparable nine months
of 2004 was $18.4 million, or 20.2%, due to an 18.6% increase in active end-of-period subscribers and a price
increase in July 2004. Our first quarter of fiscal 2005 consolidated results included $26.3 million of online
revenues.
Other revenue, comprised primarily of licensing revenues and our publications, was $55.7 million for fiscal
2005, an increase of $18.3 million, or 48.9%, from $37.4 million for fiscal 2004. Licensing revenues increased
$21.5 million, or 129.5%, due to the continued growth of our licensees around the world, the addition of new
licensees and the full year benefit from the third party license royalties which reverted to us from Heinz at the
end of September 2004. On a comparable basis, excluding the impact of the reversion, licensing revenues
increased 87.7%. Additionally, as mentioned above, our fiscal 2004 consolidated results included $2.0 million of
WeightWatchers.com royalty income, due to the timing of the adoption of FIN 46R.
Franchise royalties were $12.5 million domestically and $6.9 million internationally for fiscal 2005. Total
franchise royalties were $19.4 million, up from $18.8 million in the prior year. Excluding the franchises acquired
in fiscal 2004, domestic franchise royalties increased 8.1%, while international franchise royalties rose 8.6%.
Cost of revenues was $520.7 million for fiscal 2005, an increase of $33.6 million, or 6.9%, from
$487.1 million for fiscal 2004. Gross profit margin of 54.8% of sales in fiscal 2005 increased 230 basis points
38