WeightWatchers 2007 Annual Report Download

Download and view the complete annual report

Please find the complete 2007 WeightWatchers 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 108

  • 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
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

ANNUAL
REPORT
2007

Table of contents

  • Page 1
    ANNUAL REPORT 2007

  • Page 2
    ...Meetings Member Before 220 lbs After 176 lbs Lost 44 lbs "I had great success using both eTools and meetings in tandem. The meetings keep me accountable, and the online tools are with me wherever I go. The 24/7 access to WeightWatchers.com is invaluable, as I travel extensively for work and am a new...

  • Page 3
    ... to pursue the growth opportunities before us and build upon our market leading position going forward. By better integrating Weight Watchers into the lives of members through an easy payment plan, Monthly Pass helps our members extend their time as members, making their weight loss achievements...

  • Page 4
    ... full year already accounted for approximately half of our 38 million North American attendances in 2007. By better integrating Weight Watchers into the lives of members through an easy payment plan, Monthly Pass helps our members extend their time as members, making their weight loss achievements...

  • Page 5
    ... solution for for everyone. everyone. During During the the year, year, we we launched launched inin the the U.S. U.S. aa version version of of our our successful successful Weight Weight Watchers Watchers Online Online product product specifi specifi cally cally designed designed for for men, men...

  • Page 6
    Weight Watchers is a market leader with a robust and vibrant brand, world-class services and a broad range of innovative products. Looking ahead, we are focused on strengthening our products and services and extending our reach across new markets and audiences.

  • Page 7
    ... of group support offered in our meetings with the right products enables members to achieve even greater weight loss success. Looking ahead, we anticipate Monthly Pass will continue to be a revenue driver for Weight Watchers. Following its successes in North America, we launched Monthly Pass in...

  • Page 8
    ... subscribers to Weight Watchers Online for Men now have access to unique content such as articles on men's health issues, fitness ideas, and tips on better food choices. In addition, male members who purchase Monthly Pass also will get for free a version of eTools tailored for men, Weight Watchers...

  • Page 9
    INTEGRITY INNOVATION CANDOR POSITIVE ENERGY ACCOUNTABILITY TALENT ® COLLABORATION MEMBER SUCCESS

  • Page 10
    ... of our execution to deliver great results We use these values as guideposts not only for how we should behave as a company, but also as individuals. Weight Watchers is a market leader with a robust and vibrant brand, world-class services and a broad range of innovative products. Looking ahead...

  • Page 11
    ...WEIGHT WATCHERS INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Virginia (State or other jurisdiction of incorporation or organization) (Address of principal executive offices) 11-6040273 (I.R.S. Employer Identification No.) (Zip code) 11 Madison Avenue, 17th Floor, New...

  • Page 12
    ...Item 9A. Item 9B. Part III Item 10. Item 11. Item 12. Item 13. Item 14. Part IV Item 15. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities ...Selected Financial Data ...Management's Discussion and Analysis of Financial Condition and Results...

  • Page 13
    ...offices in New York, New York. In this Annual Report on Form 10-K, unless the context indicates otherwise: "we", "us", "our" and the "Company" refers to Weight Watchers International, Inc. and all of its subsidiaries consolidated for purposes of its financial statements, including WeightWatchers.com...

  • Page 14
    ... management companion for Weight Watchers meetings members who want to interactively manage the day-to-day aspects of their weight management plans on the Internet. We currently offer these two products in the United States, the U.K., Canada, Germany, France and Australia. Our licensing revenues...

  • Page 15
    ... to eat non-core foods within an allotted weekly POINTS allowance. Our Meetings Clinical studies have shown that consumers who attend Weight Watchers meetings are likely to lose more weight than those who diet on their own. Our group support system remains the cornerstone of our meetings. Members...

  • Page 16
    ... to cancel. Monthly Pass is available for purchase throughout the year. As part of Monthly Pass, members receive unlimited access to meetings at this discounted monthly price plus free access to Weight Watchers eTools, the Internet weight management companion for Weight Watchers meetings members. In...

  • Page 17
    ... the end of fiscal 2007, WeightWatchers.com had approximately 584,000 active Weight Watchers Online subscribers. As Weight Watchers Online and Weight Watchers eTools reflect different value propositions, the subscriptions are priced differently. Both subscription products currently offer an initial...

  • Page 18
    ... subscription products. For example, in December 2005 we launched in the United States an online store that sells our products (such as bars, snacks and POINTS calculators) to our Weight Watchers Online subscribers. We are also exploring options to further increase our Internet advertising sales...

  • Page 19
    ..., an industry tracking service. In addition to generating revenues from subscription sales and advertising, Weight Watchers Magazine also reinforces the value of our brand and serves as a powerful tool for marketing to both existing and potential customers. Marketing and Promotion Word of Mouth The...

  • Page 20
    ... At Work meeting efforts to target the corporate market. Public Relations A key focus of our public relations efforts is through our current and former members who have successfully lost and maintained their weight on our program. These leaders and members engage in local promotions, information...

  • Page 21
    .... For example, many of these competitors' businesses are based on the sale of pre-packaged meals and meal replacements. Our meetings use group support, education and behavior modification to help our members change their eating habits, in conjunction with flexible food plans that allow members the...

  • Page 22
    ... agreement. WeightWatchers.com used cash on hand and the proceeds of the WW.com Credit Facilities (as defined below in "Item 6. Selected Financial Data-Items Affecting Comparability-Debt Refinancing") in the aggregate amount of $215.0 million to finance this redemption, as well as pay related fees...

  • Page 23
    ...by our officers, directors and 10 percent shareholders. Usually these are publicly accessible no later than the business day following the filing. Shareholders may request a free copy of our Code of Business Conduct and Ethics and our Corporate Governance Guidelines at: Weight Watchers International...

  • Page 24
    ... and meal replacement products, and other weight management brands, diets, programs and products; risks associated with the relative success of our marketing and advertising; risks associated with the continued attractiveness of our plans; risks associated with general economic conditions and...

  • Page 25
    ... and non-profit groups that offer weight management services; and fitness centers. Additional competitors may emerge as new or different products or methods of weight management are developed and marketed. More effective or more favorably perceived diet and weight management methods, including...

  • Page 26
    ...of other expense (income). Accordingly, changes in currency exchange rates will cause our revenues, operating costs, net income and shareholders' equity to fluctuate. We may not successfully make or integrate acquisitions. As part of our growth strategy, we intend to pursue selected acquisitions. We...

  • Page 27
    ...at year end and during the summer months. This seasonality could cause our share price to fluctuate as the results of an interim financial period may not be indicative of our full year results. Seasonality also impacts relative revenue and profitability of each quarter of the year, both on a quarter...

  • Page 28
    ... customers regarding our use of personal information collected on our websites or through our products and services, such as weight management information, financial data, email addresses and home addresses, could keep them from using our websites or purchasing our products or services. Industry...

  • Page 29
    ... marketing and advertising practices, relations with consumers or franchisees or our food and weight management products and services, may have an adverse impact on us. Our debt service obligations and the restrictions of our debt covenants could impede our operations and flexibility. Our financial...

  • Page 30
    ...shareholders' rights plan adopted by our Board of Directors. These provisions could limit the price that certain investors might be willing to pay in the future for shares of our common stock. Item 1B. Unresolved Staff Comments None. Item 2. Properties We are currently headquartered in New York, New...

  • Page 31
    ... the High Court's ruling in relation to the first meeting which members attend. If Weight Watchers meetings fees in the U.K. are deemed to be fully subject to 17.5% VAT, we estimate the amount owed to HMRC would be approximately $50 million as of the end of fiscal 2007, covering fiscal years 2005...

  • Page 32
    ... 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 to joining us, she served as Chief Financial Officer of VitaminShoppe.com, Inc...

  • Page 33
    ..., Mr. Eberly served as the Senior Vice President of Marketing and Sales for WeightWatchers.com as well as the Chief Marketing Officer for WeightWatchers.com. Before joining us, Mr. Eberly held a variety of senior marketing and sales management positions with Nabisco, Inc. and Pepsico. He received...

  • Page 34
    ... 29, 1999. Mr. Fajgenbaum is a Managing Director of The Invus Group, LLC, which he joined in 1996. Prior to joining The Invus Group, LLC, Mr. Fajgenbaum was a consultant for McKinsey & Company in New York from 1994 to 1996. He graduated with a B.S. from the Wharton School of Business and a B.A. in...

  • Page 35
    ...for the period indicated, the high and low sales prices per share for our common stock as reported on the NYSE consolidated tape. Fiscal 2007 (Year ended December 29, 2007) High Low First Quarter ...Second Quarter ...Third Quarter ...Fourth Quarter ...Fiscal 2006 (Year ended December 30, 2006) $55...

  • Page 36
    ...(as defined below) also contains restrictions on our ability to pay dividends on our common stock. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Long-Term Debt" for a description of the WWI Credit Facility and these...

  • Page 37
    ... then-existing credit facility. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Long Term Debt" for a description of the WWI Credit Facility. On August 21, 2003, in connection with the purchase of the majority of our...

  • Page 38
    ... our Tender Offer and share repurchase described under "Item 5 - Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities", we increased our borrowing capacity by adding an Additional Term Loan A in the amount of $700.0 million and a new Term Loan...

  • Page 39
    ... in Dallas and New Mexico for a total purchase price of $27.2 million. These acquisitions were financed through cash from operations. The acquisitions were accounted for as purchases and, accordingly, earnings from these franchises have been included in our consolidated operating results since their...

  • Page 40
    ... • Meeting fees. Members pay us fees to attend our weekly meetings. Product sales. We sell proprietary products that complement our weight management plans, such as bars, snacks, cookbooks, POINTS value guides, Weight Watchers magazines and POINTS calculators, primarily to members in our meetings...

  • Page 41
    ... primarily as a result of our increased focus on expanding the number of Weight Watchers branded products worldwide and the reversion to us at the end of the third quarter of fiscal 2004 of revenues from certain third party licenses that had been paid to Heinz up until that time. • • • 28

  • Page 42
    ... with Monthly Pass' growing penetration in NACO, we introduced a new additional volume metric in an effort to provide a greater degree of insight into our business. This new metric, meeting paid weeks, captures total Weight Watchers paid meeting membership by adding paid commitment plan weeks to pay...

  • Page 43
    ... our cash flows and earnings. These key performance indicators include net revenues, which are an indicator of our overall business growth; attendance and paid weeks metrics; meeting fee revenue per attendee and in-meeting product sales per attendee; the number of WeightWatchers Online subscribers...

  • Page 44
    ... 100% of WeightWatchers.com. The transactions described above relating to WeightWatchers.com were evaluated, negotiated and recommended by a Special Committee of Weight Watchers International's Board of Directors consisting of its independent directors. Franchise Acquisitions From time to time, we...

  • Page 45
    ... meeting fees, such as Monthly Pass, and magazine subscription revenue, is amortized into income over the period earned. Discounts to customers, including free registration offers, are recorded as a deduction from gross revenue in the period such revenue was recognized. WeightWatchers.com primarily...

  • Page 46
    ... fiscal quarter ended April 3, 2004, our consolidated balance sheet includes the balance sheet of WeightWatchers.com. Effective at the beginning of the second quarter of fiscal 2004, our consolidated statement of operations and statement of cash flows include the results of WeightWatchers.com. All...

  • Page 47
    ... on the date of grant using the BlackScholes option pricing model, which requires estimates of the expected term of the option, the expected volatility of the Company's stock price, the risk-free interest rate and the expected dividend yield. We recognize expense for all share-based awards based on...

  • Page 48
    ... launch and strong sell through of several new consumables products and by the strong appeal of our newly designed enrollment products to both new and returning members. Internet revenues, which include subscription revenue from sales of Weight Watchers Online and Weight Watchers eTools, as well as...

  • Page 49
    ...70 basis points from 54.8% of sales in the prior year. The margin expansion was derived primarily from higher meeting fees per attendee, a result of Monthly Pass in NACO, a price increase in the U.K. and price increases in a few Continental European markets, and from growth in the licensing business...

  • Page 50
    ...) to Fiscal 2005 (52 weeks) The table below shows the consolidated income statements for the years ended December 30, 2006 and December 31, 2005. As a result of the July 2, 2005 transaction, which increased Weight Watchers International's ownership in WeightWatchers.com from approximately 20% to...

  • Page 51
    ... growth in the period, with the average meeting fee per attendee up 7.1% over the prior year. The increase in meeting fee per attendee resulted from the positive impact of two new commitment plans, Season Pass, and Monthly Pass, and from a one dollar price rise in approximately 40% of our markets...

  • Page 52
    ... the timing of Easter, as mentioned above, and in support of the newly acquired territories coupled with increased offline advertising to support the WeightWatchers.com business. Marketing, as a percentage of revenues declined to 12.9% for fiscal 2006, as compared to 13.7% in the prior year. Selling...

  • Page 53
    ... 2006 franchise acquisitions and $31.0 million for capital spending. Net cash used for financing activities totaled $90.9 million, including $151.7 million used to repurchase 3.6 million shares of our common stock pursuant to our stock repurchase plan and $51.8 million used to pay dividends, offset...

  • Page 54
    ...WeightWatchers.com and $19.4 million for capital spending. Net cash provided for financing activities totaled $103.2 million, comprised of net borrowings of $277.0 million and the use of $176.0 million for the repurchase of 3.7 million shares of our common stock pursuant to our stock repurchase plan...

  • Page 55
    ... the payment of dividends based on these factors. The WWI Credit Facility also contains restrictions on our ability to pay dividends on our common stock. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Long-Term Debt...

  • Page 56
    ... cash consideration of $304.8 million. As a result of this redemption, WeightWatchers.com is a wholly-owned subsidiary of Weight Watchers International. Franchise Acquisitions In January 2008, we acquired substantially all of the assets of our Palm Beach, Florida franchisee for a purchase price...

  • Page 57
    ... fiscal year-end 2007, $216.4 million remains available to purchase our shares under this program. From fiscal 2003 through fiscal 2006, we purchased 12.8 million shares of common stock in the open market for a total purchase price of $533.6 million. On December 18, 2006, we commenced a Tender Offer...

  • Page 58
    ... Our operating income for the first half of the year is generally the strongest. While WeightWatchers.com experiences similar seasonality in terms of new subscriber signups, its revenue tends to be less seasonal because it amortizes subscription revenue over the related subscription period. Recently...

  • Page 59
    ... accordance with accounting principles generally accepted in the United States of America. Our management assessed the effectiveness of our internal control over financial reporting as of December 29, 2007, the end of fiscal 2007. In making this assessment, our management used the criteria set forth...

  • Page 60
    ... of our internal control over financial reporting as of December 29, 2007 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears on page F-2 to our consolidated financial statements. Item 9B. Other Information None...

  • Page 61
    ... financial officer, principal accounting officer and controller, and our employees and directors. Our Code of Business Conduct and Ethics, as amended, is available on our website at www.weightwatchersinternational.com. In addition, shareholders may request a free copy of the Code of Business Conduct...

  • Page 62
    PART IV Item 15. Exhibits and Financial Statement Schedules 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 Annual Report on Form 10-K. 2. Financial Statement Schedule The financial ...

  • 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 Report of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets at ...

  • Page 64
    ... PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Weight Watchers International, Inc.: In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) on page F-1 present fairly, in all material respects, the financial position of Weight...

  • Page 65
    ... and other intangible assets ...Deferred income taxes ...Deferred financing costs, net ...Other noncurrent assets ...TOTAL ASSETS ...LIABILITIES AND SHAREHOLDERS' DEFICIT CURRENT LIABILITIES Portion of long-term debt due within one year ...Accounts payable ...Dividend payable ...Salaries and...

  • Page 66
    ... CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE FISCAL YEARS ENDED (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) December 29, 2007 (52 weeks) December 30, 2006 (52 weeks) December 31, 2005 (52 Weeks) Meeting fees, net ...Product sales and other, net ...Internet revenues ...Revenues, net ...Cost...

  • Page 67
    ... ...Total Comprehensive Income ...Issuance of treasury stock under stock plans ...Tax benefit of restricted stock units vested and stock options exercised ...Secondary offering fees ...Cash dividends declared ...Purchase of treasury stock ...Compensation expense on share-based awards ...Balance at...

  • Page 68
    ... paid for acquisitions ...Other items, net ...Cash used for investing activities ...Financing activities: Net increase in short-term borrowings ...Proceeds from borrowings ...Payments on long-term debt ...Proceeds from new term loan ...Payment of dividends ...Secondary offering fees ...Tax benefit...

  • Page 69
    ... a result of Weight Watchers International, Inc.'s increased ownership interest in WW.com (see Notes 2 and 3), beginning with the third quarter of 2005, WW.com is consolidated pursuant to Accounting Research Bulletin No. 51, "Consolidated Financial Statements." The term "Company" as used throughout...

  • Page 70
    ...third quarter of fiscal 2005, the Company consolidates 100% of the results of operations and financial position of WW.com under the traditional rules of consolidation rather than under the provisions of FIN 46R. Use of Estimates: The preparation of financial statements, in conformity with accounting...

  • Page 71
    ... information session and materials we provide to new members in our meeting business. Revenue from these registration fees is recognized when the service and products are provided, which is generally at the same time payment is received from the customer. Revenue from meeting fees, product sales...

  • Page 72
    ... meeting fees, such as Monthly Pass, and magazine subscription revenue, is amortized into income over the period earned. Discounts to customers, including free registration offers, are recorded as a deduction from gross revenue in the period such revenue was recognized. WeightWatchers.com primarily...

  • Page 73
    ...over which it does not have significant influence. Deferred Financing Costs: Deferred financing costs consist of fees paid by the Company as part of the establishment, exchange and/or modification of the Company's long-term debt. During the fiscal years ended December 29, 2007, December 30, 2006 and...

  • Page 74
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) connection with the acquisition of WW.com (See Note 3), no compensation expense for employee stock options was reflected in earnings, as all options were...

  • Page 75
    ... and other current assets ($136). On November 2, 2006, the Company acquired substantially all of the assets of its Suffolk County, New York franchisee, Weight Watchers of Suffolk, Inc., for a net purchase price of approximately $24,170, plus assumed liabilities of $330. The total purchase price has...

  • Page 76
    ... compensation expense as the restricted stock units vest. In connection with the acquisition of the WW.com shares, WWI also purchased and canceled all 103 outstanding WW.com options held by WWI employees for a total settlement price of $2,415. Under the guidance of FIN 44 and EITF 00-23, the Company...

  • 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 The Company performed its annual impairment review of goodwill and other indefinite-lived intangible assets as ...

  • Page 78
    ...of the deferred financing costs associated with its old debt. On January 26, 2007, in connection with the Tender Offer (as defined in Note 7) and the share repurchase from Artal, the Company increased its debt capacity by adding an Additional Term Loan A in the amount of $700,000 and a new Term Loan...

  • Page 79
    ..., pay dividends on and redeem capital stock, make other payments, including investments, sell its assets and enter into consolidations, mergers and transfers of all or substantially all of its assets. The WWI Credit Facility also requires the Company to maintain specified financial ratios...

  • Page 80
    ... Board of Directors authorized a program to repurchase up to $250,000 of the Company's outstanding common stock. On each of June 13, 2005 and May 25, 2006, WWI's Board of Directors authorized adding $250,000 to this program. The repurchase program allows for shares to be purchased from time to time...

  • Page 81
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 8. Earnings Per Share Basic earnings per share ("EPS") computations are calculated utilizing the weighed average number of common shares outstanding ...

  • Page 82
    .... Stock Option Awards Pursuant to the option components of the Stock Plans, the Board of Directors authorized the Company to enter into agreements under which certain members of management received stock options. The options are exercisable based on the terms outlined in the agreement. The options...

  • Page 83
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) A summary of option activity under the plans for the year ended December 29, 2007 is presented below: WeightedAverage Exercise Price WeightedAverage ...

  • Page 84
    ...: In April 2000, 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...

  • Page 85
    ... on the Company's consolidated balance sheet are as follows: December 29, 2007 December 30, 2006 Amortization ...Provision for estimated expenses ...Operating loss carryforwards ...Salaries and wages ...Share-based compensation ...Other ...Less: valuation allowance ...Total deferred tax assets...

  • Page 86
    ...The Internal Revenue Service ("IRS") completed an examination of the Company's U.S. federal income tax returns for the years 2002 through 2003. The IRS proposed and management agreed to certain adjustments that did not have a material impact on the Company's financial position, results of operations...

  • Page 87
    ... and Restated Weight Watchers Executive Profit Sharing Plan ("EPSP"). Under the IRS definition, the EPSP is considered a Nonqualified Deferred Compensation Plan. There is a promise of payment by the Company made on the employees' behalf instead of an individual account with a cash balance. The EPSP...

  • Page 88
    ... the U.K. VAT and Duties Tribunal, or VAT Tribunal, appealing a ruling by Her Majesty's Revenue and Customs, or HMRC, that from April 1, 2005 Weight Watchers meetings fees in the U.K. should be fully subject to 17.5% standard rated value added tax, or VAT. For over a decade prior to April 1, 2005...

  • Page 89
    ...WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) assessment associated with the notices of determination and decisions is approximately $27,000. It is the Company's view that the U.K. leaders and other service...

  • Page 90
    ... TO CONSOLIDATED FINANCIAL STATEMENTS-Continued (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Information about the Company's reportable operating segments is as follows: Weight Watchers International Year Ended December 29, 2007 Weight Watchers Intercompany .com Eliminations Consolidated Revenues from...

  • Page 91
    ... TO CONSOLIDATED FINANCIAL STATEMENTS-Continued (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Weight Watchers International Year Ended December 31, 2005 Weight Watchers Intercompany .com Eliminations Consolidated Revenues from external customers ...Intercompany revenue ...Total revenue ...Depreciation...

  • Page 92
    ...and long-term debt, and interest rate swap 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 basis using the rates available...

  • Page 93
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Derivative Instruments and Hedging: The Company enters into interest rate swaps to hedge a substantial portion of its variable rate debt. As of December ...

  • Page 94
    ...material impact on its financial position, results of operations or cash flows. 18. Subsequent Events In January 2008, the Company acquired substantially all of the assets of its Palm Beach, Florida franchisee, Weight Watchers of Palm Beach County, Inc., for a purchase price of approximately $12,900...

  • Page 95
    SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (IN THOUSANDS) Balance at Beginning of Period Additions Charged to Charged Costs and to Other Expenses Accounts Balance at End of Period Deductions(1) FISCAL YEAR ENDED DECEMBER 29, 2007 Allowance for doubtful accounts ...Inventory ...

  • Page 96
    ...INDEX Exhibit Number Description **2.1 Agreement and Plan of Merger, by and among Weight Watchers International, Inc., WeightWatchers.com, Inc. and SCW Merger Sub, Inc. dated as of June 13, 2005 (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July...

  • Page 97
    ... Watchers International, Inc., WeightWatchers.com, Inc. and Artal Luxembourg, S.A., dated as of June 13, 2005 (filed as Exhibit 10.3 to the Company s Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2005, and incorporated herein by reference). Form of Term Sheet for Employee Stock...

  • Page 98
    ... Statement of Amendments to the Executive Profit Sharing Plan (filed as Exhibit 99.5 to the Company's Current Report on Form 8-K as filed on December 15, 2006, and incorporated herein by reference). Stock Purchase Agreement, dated as of December 17, 2006, by and between Weight Watchers International...

  • Page 99
    ... Company's Current Report on Form 8-K, as filed on January 26, 2007, and incorporate herein by reference). Amended and Restated Weight Watchers Executive Profit Sharing Plan, effective as of January 1, 2005. Subsidiaries of Weight Watchers International, Inc. Consent of Independent Registered Public...

  • Page 100
    ... Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WEIGHT WATCHERS INTERNATIONAL, INC. Date: February 27, 2008 By: /S/ DAVID P. KIRCHHOFF David P. Kirchhoff President, Chief Executive Officer and Director...

  • Page 101
    ... 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: February 27, 2008 By: /S/ DAVID P. KIRCHHOFF David P. Kirchhoff President, Chief Executive Officer and Director (Principal Executive...

  • Page 102
    ... of Weight Watchers International, Inc. of our report dated February 27, 2008 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. PricewaterhouseCoopers LLP New York, New York February...

  • Page 103
    ... financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules...

  • Page 104
    ... financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules...

  • Page 105
    ...-OXLEY ACT OF 2002 In connection with the Annual Report on Form 10-K of Weight Watchers International, Inc. (the "Company") for the fiscal year ending December 29, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David P. Kirchhoff, certify, pursuant to...

  • Page 106
    ...-OXLEY ACT OF 2002 In connection with the Annual Report on Form 10-K of Weight Watchers International, Inc. (the "Company") for the fiscal year ending December 29, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ann M. Sardini, certify, pursuant to...

  • Page 107
    STOCK PERFORMANCE GRAPH The following graph sets forth the cumulative return on Weight Watchers International common stock from November 15, 2001, the date on which the Company's stock commenced trading on the New York Stock Exchange, through December 28, 2007, the last trading day of the Company's ...

  • Page 108
    ... AND SHAREHOLDER INFORMATION The 2008 Annual Meeting of Shareholders of Weight Watchers International, Inc. Location The Carlton Hotel, 88 Madison Avenue, New York, NY 10016 Date Tuesday, May 6, 2008, at 10:00 a.m. Eastern Time Corporate Headquarters 11 Madison Avenue, 17th Floor, New York, NY...