WeightWatchers 2007 Annual Report Download - page 48

growth partially offset by a $0.7 million decrease in other revenues primarily resulting from lower franchise
royalties. Net revenues were positively impacted by foreign currency exchange rates in the amount of $43.0
million or 3.5%.
For fiscal 2007, total global meeting fees were $880.7 million versus $723.1 million for fiscal 2006, an
increase of $157.6 million, or 21.8% including the favorable impact of foreign currency translation. Globally,
attendance volume reached 62.7 million for fiscal 2007, up 2.6% from 61.1 million in the prior year. NACO and
the U.K. grew attendance volumes, while Continental Europe declined. In fiscal 2007, there were 84.6 million
paid weeks in the global meeting business, a 22.8% increase from the prior year level. The excess of paid weeks
growth over attendance growth was the key driver of the 15.4% increase in the average meeting fee per attendee
on a constant currency basis. The paid weeks metric for meetings, which we began to furnish in fiscal 2007 in
order to provide greater transparency, captures total Weight Watchers paid membership by adding pay-as-you-go
attendance to paid commitment plan weeks.
In NACO, meeting fees for fiscal 2007 were $603.7 million, up $132.0 million, or 28.0%, from $471.8
million for fiscal 2006. Attendances were 38.1 million, including 3.3 million from acquisitions made during the
second half of fiscal 2006. NACO’s attendance in total grew 7.7% versus the prior year, but was slightly behind
fiscal 2006 excluding acquisitions, declining 1.7%. Paid weeks rose 36.5% as a result of the success of NACO’s
Monthly Pass, outpacing attendance and thereby driving the 18.7% increase in the average meeting fee. In fiscal
2007, approximately half of our member attendances in NACO were attributable to Monthly Pass. Monthly Pass,
first introduced in our 2006 fall marketing campaign, is a recurring billing model whereby the member authorizes
us to charge her credit card on a monthly basis, at a discounted rate, until the member elects to cancel. The
increase in the average meeting fee arises because not all members who purchase Monthly Pass attend all the
meetings for which they have paid.
This year we introduced paid weeks, a new and additional volume metric to provide a greater degree of
insight into our business. Before the recent launch of our new commitment plans in the meeting business, growth
in attendance essentially approximated growth in meeting paid weeks. With Monthly Pass’ growing penetration
in NACO, we felt that another metric, meeting paid weeks, was needed. The meeting paid week metric captures
total Weight Watchers paid meeting membership by adding paid commitment plan weeks to pay-as-you-go
weeks for a given period, thus providing a greater degree of transparency.
International company-owned meeting fees were $277.0 million for fiscal 2007, an increase of $25.7
million, or 10.2%, from $251.3 million for fiscal 2006. On a local currency basis, total international meeting fee
revenues increased 1.0% from the prior year. Despite U.K. attendance growth of 1.9% in fiscal 2007, total
international attendance declined 4.4% in the period to 24.6 million as a result of softness in Continental Europe,
down 8.5%.
Worldwide product sales for fiscal 2007 were $337.7 million, up $44.4 million, or 15.1%, from $293.3
million for fiscal 2006. Domestically, product sales grew 12.0% or $19.6 million to $182.9 million in fiscal 2007.
International product sales increased 19.1%, or $24.8 million, to $154.8 million. On a local currency basis,
international product sales rose 9.1%. Increased product sales penetration in the meeting room was driven by the
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 Internet advertising revenue, grew $22.2 million, or 17.2%, to $151.6 million for
fiscal 2007, from $129.4 million for fiscal 2006. End-of-period active Weight Watchers Online subscribers
increased 27.0%, from approximately 460,000 at December 30, 2006 to approximately 584,000 at December 29,
2007. This growth was driven by building awareness resulting from the success of WeightWatchers.com’s first
three national television advertising campaigns, which aired in the beginning of 2007 and again in the spring and
fall. The revenue impact of the growth in end-of-period online subscribers was partially offset by a reduction in
paid Weight Watchers eTools subscribers in the year as compared to last year, since Weight Watchers eTools is
now provided free as part of Monthly Pass. While Internet revenues from Weight Watchers eTools are negatively
impacted by this, the revenue gains in NACO from Monthly Pass have far surpassed the impact of this decrease.
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