WeightWatchers 2008 Annual Report Download

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STOP
DIETING.
START
LIVING.
2008 ANNUAL REPORT

Table of contents

  • Page 1
    STOP DIETING. START LIVING. 2008 ANNUAL REPORT

  • Page 2
    WANDA | Meetings Member | USA Before 241 lbs After 166.4 lbs Lost 74.6 lbs "Choosing Weight Watchers was the best decision I've ever made. I've learned to make healthier choices and portion control. I was excited to know something finally worked! My family now eats healthier and they're loving it."...

  • Page 3
    ...our business and offerings into new markets. In 2008, Weight Watchers recorded revenue of $1.54 billion, up almost 5% over 2007. Growth was broadbased, with global meeting fees, internet revenues and licensing revenues all contributing. Of significant note was our WeightWatchers.com business, which...

  • Page 4
    ...meetings and use Weight Watchers eTools lose 50% more weight than those who attend meetings alone.1 In 2008, we launched Monthly Pass in France, bringing the total number of countries in which this commitment plan is offered to five. In the United States, the plan's most mature market, Monthly Pass...

  • Page 5
    IVY | Member Service Officer | China Before 136.4 lbs After 119 lbs Lost 17.4 lbs We look not only to our current markets for growth opportunities, but are also pursuing growth opportunities in new markets.

  • Page 6
    Our value proposition: with Weight Watchers, our members eat regular food, purchased from their local grocery stores.

  • Page 7
    ... potential members, and continue to differentiate our approach from our competitors, we kicked off 2008 with an entirely new North America advertising campaign centered around the theme, "Stop Dieting. Start Living." This high-energy campaign was designed to increase the relevance of Weight Watchers...

  • Page 8
    ... proposition: with Weight Watchers, our members eat regular food, purchased from their local grocery stores. In the scheme of a typical consumer's monthly budget, we believe our price points are well worth their value given the goal of a healthier life and reduced healthcare costs. We will continue...

  • Page 9
    At its heart, the culture of Weight Watchers is based upon giving members the resources, inspiration and support to help themselves. Lose for Good was a natural fit with this philosophy and, simply put, the right thing to do.

  • Page 10
    ...members and subscribers, service providers, employees, directors and shareholders for their dedication and service throughout the year. I look forward to the many successes and opportunities that lie ahead as we execute our strategy and further build on the market leading position of Weight Watchers...

  • Page 11
    ... Commission file number 001-16769 (Exact name of registrant as specified in its charter) . WEIGHT WATCHERS INTERNATIONAL, INC. Virginia (State or other jurisdiction of incorporation or organization) (Address of principal executive offices) (Zip code) 11-6040273 (I.R.S. Employer Identification No...

  • Page 12
    ...Executive Officers and Directors of the Company ... 1 14 20 20 20 21 22 Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities ...Item 6. Selected Financial Data ...Item 7. Management's Discussion and Analysis of Financial Condition and Results...

  • Page 13
    ... our fiscal year ended December 29, 2007; "fiscal 2008" refers to our fiscal year ended January 3, 2009; and "fiscal 2009" refers to our fiscal year ended January 2, 2010. The following terms used in this Annual Report on Form 10-K are our trademarks: Weight Watchers®, WeightWatchers.com®, POINTS...

  • Page 14
    ...lose weight through sensible and sustainable food plans, exercise, behavior modification and group support. Each week, approximately 1.4 million members attend over 50,000 Weight Watchers meetings around the world, which are run by more than 16,000 leaders-each of whom has lost weight on our program...

  • Page 15
    ... weight management programs. This growth and awareness is also a result of an increasing willingness of employers and governments to promote and contribute towards the cost of weight management programs. Our Services and Products Our Weight Management Plans In each of our markets, we offer services...

  • Page 16
    ...-as-you-go" arrangement. A new member pays an initial registration fee and then a weekly fee for each meeting attended, although free registration is offered as a promotion during certain times of the year. We also offer prepayment plans consisting of pre-paid meeting vouchers and coupons. In fiscal...

  • Page 17
    ... the end of fiscal 2008, WeightWatchers.com had approximately 679,000 active Weight Watchers Online subscribers. As Weight Watchers Online and Weight Watchers eTools reflect different value propositions, the subscription products are priced differently. Both subscription products currently offer an...

  • Page 18
    ... 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. Revenues from our WeightWatchers.com business contributed 12.3% of our total...

  • Page 19
    ... information about our services and our products, such as our toll-free numbers and a URL for WeightWatchers.com. This marketing and promotional support reinforces the value of our brand. We continue to believe there are significant opportunities both in the United States and internationally...

  • Page 20
    ... per month in the United States alone. National Accounts and At-Work Meetings As healthcare costs continue to be a significant concern on the minds of employers and their employees, we believe that our broad range of services and products uniquely positions us to serve the corporate market and help...

  • Page 21
    ... our website and increased efforts to share our consumer and program insights with leaders in the scientific and medical communities as well as the general public. Weight Watchers Magazine In addition to generating revenues from subscription sales and advertising, Weight Watchers Magazine reinforces...

  • Page 22
    .... 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 freedom to choose what they eat. There are no significant group education-based competitors in any of our major markets...

  • Page 23
    ... common stock held by Artal for a total price of approximately $304.8 million as provided in the redemption 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...

  • Page 24
    ...in Note 15 of our consolidated financial statements, contained in Part IV, Item 15 of this Annual Report on Form 10-K. Information concerning some of the risks to which we are exposed resulting from our international operations and foreign currency exchange rates is set forth under the heading "Risk...

  • Page 25
    ....com as a channel of distribution of material Company information. Financial and other material information regarding Weight Watchers International is routinely posted on and accessible at our website. Our Code of Business Conduct and Ethics and our Corporate Governance Guidelines...

  • Page 26
    ..., dietary supplements 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...

  • Page 27
    ...brand image, marketing programs, cost and perception of the efficacy of the service and product offerings. Moreover, customers can, and frequently do, change weight management approaches easily and at little cost. For example, in fiscal 2003 and fiscal 2004, our revenue growth was adversely affected...

  • Page 28
    .... Our consolidated financial results are denominated in U.S. dollars and therefore, during times of a strengthening U.S. dollar, our reported international revenues and earnings will be reduced because the local currency will translate into fewer U.S. dollars. In addition, the assets and liabilities...

  • Page 29
    ... of our full year results. Seasonality also impacts relative revenue and profitability of each quarter of the year, both on a quarter-to-quarter and year-over-year basis. The timing of certain holidays, particularly Easter, which precedes our spring marketing campaign and occurs between March...

  • Page 30
    ... develop alternatives or stop using the service, product, software, technology or content for any infringing aspects of our business, we may be forced to limit our service and product offerings. Any of these results could reduce our revenues and our ability to compete effectively, increase our costs...

  • Page 31
    ... customers regarding our use of personal information collected on our websites or through our services and products, such as weight management information, financial data, email addresses and home addresses, could keep them from using our websites or purchasing our services or products. Industry...

  • Page 32
    ... the meaning of the New York Stock Exchange rules and, as a result, qualify for exemptions from certain corporate governance requirements. Artal controls a majority of the voting power of our outstanding common stock. Under the NYSE rules, a listed company of which more than 50% of the voting power...

  • Page 33
    ... 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 York in leased office space. We...

  • Page 34
    ... with SFAS 5, we recorded as an offset to revenue VAT charges associated with U.K. meeting fees as earned, consistent with the Court of Appeal's ruling. These charges were approximately $1.8 million with respect to the third quarter of fiscal 2008 and approximately $1.4 million with respect to the...

  • Page 35
    ... Financial Officer President, North America President, International President, WeightWatchers.com and Chief Technology Officer Executive Vice President, General Counsel and Secretary Chairman of the Board Director Director Director Director Director Director Director (1) Member of our Compensation...

  • Page 36
    ... is also a director and the Chairman of the Board of Directors of a number of private companies of which Artal or Invus, L.P. are shareholders. Philippe J. Amouyal. Mr. Amouyal has been a director since November 2002. Mr. Amouyal is a Managing Director of The Invus Group, LLC, a position he has held...

  • Page 37
    ... is a director of a number of private companies of which Artal or Invus, L.P. are shareholders. Sacha Lainovic. Mr. Lainovic has been a director since our acquisition by Artal on September 29, 1999. Since 2007, Mr. Lainovic has been Managing Partner of Invus Financial Advisors, LLC, a New York-based...

  • Page 38
    ...) 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" in Part II of this Annual Report on Form 10-K for a description of the...

  • Page 39
    ... years. SELECTED FINANCIAL DATA (in millions, except per share amounts) Fiscal 2008 (53 weeks) Fiscal 2007 (52 weeks) Fiscal 2006 (52 weeks) Fiscal 2005 (52 weeks) Fiscal 2004 (52 weeks) Revenues, net ...Net income ...Working capital (deficit) ...Total assets ...Long-term obligations ...Earnings...

  • Page 40
    ... in connection with our Tender Offer and share repurchase described under "Item 1. Business-History-Tender Offer and Share Repurchase" in Part II of this Annual Report on Form 10-K, we increased our borrowing capacity by adding an Additional Term Loan A in the amount of $700.0 million and a new Term...

  • Page 41
    ...assets of two of our franchisees, Weight Watchers of Syracuse, Inc. and Dieters of the Southern Tier, Inc. for a combined purchase price of approximately $20.9 million. These acquisitions were financed through cash from operations. These acquisitions have been accounted for as purchases and earnings...

  • Page 42
    ... amount was subsequently reversed in fiscal 2006 due to the utilization of the net operating loss carryforwards. During the fourth quarter of fiscal 2006, we recorded a tax benefit of $6.3 million by reversing tax reserves which due to the resolution of certain tax matters were no longer necessary...

  • Page 43
    ... our revenues principally from: • • Meeting fees. Members pay us fees to attend our weekly meetings. Product sales. We sell a range of products that complement our weight management plans, such as bars, snacks, cookbooks, POINTS value guides, Weight Watchers magazines and POINTS calculators...

  • Page 44
    .... From fiscal 2004 to fiscal 2008, our Internet revenues have grown at a compound annual growth rate of 30.0%. The increase in Internet revenues during this time is primarily due to the growth in the number of WeightWatchers.com's end-of-period active online subscribers from 340,000 on December 31...

  • Page 45
    ... weeks is the sum of total paid commitment plan weeks and total pay-as-you-go weeks for a given period. For Weight Watchers Online, paid weeks is the total paid Weight Watchers Online subscriber weeks for a given period. Before the launch of our commitment plans in the meetings business, our members...

  • Page 46
    ...an increase in the number of online paid weeks of 54.4%, from 25.2 million in fiscal 2006 to 38.9 million in fiscal 2008. This success is due largely to the acquisition of new Weight Watchers Online subscribers in the United States as well as the launch of WeightWatchers.com subscription products in...

  • Page 47
    ... 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; and...

  • Page 48
    ... meeting fees, such as Monthly Pass, and magazine subscription revenue, is amortized into revenue 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 49
    ... to the opening balance of retained earnings for fiscal 2007. Capitalized Software Development We follow the provisions of the American Institute of Certified Public Accountants Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use", which...

  • Page 50
    ... VAT on meeting fees collected by our U.K. subsidiary. We discuss the U.K. VAT ruling in Note 14 of our Consolidated Financial Statements. After accounting for the aforementioned U.K. VAT ruling, which lowered our full year revenues by a net $26.5 million, our reported revenues for fiscal 2008 were...

  • Page 51
    .... In fiscal 2008, paid weeks rose 4.5% versus the prior year period as a result of the continued success of Monthly Pass outpacing attendance and thereby driving an 8.2% increase in the average meeting fee per attendee versus the prior year period. In the United States, the third quarter of fiscal...

  • Page 52
    ...VAT ruling, our gross margin was 55.1% for fiscal 2008, a decline of 40 basis points from the prior year. The decline in this adjusted gross margin was due to start-up costs for Monthly Pass in Continental Europe, lower meeting averages in some of the countries in which we operate, and lower product...

  • Page 53
    ... the adjustment for the U.K. VAT ruling, our effective tax rate for fiscal 2008 was 38.9%. Comparison of Fiscal 2007 (52 weeks) to Fiscal 2006 (52 weeks) Fiscal 2007 Fiscal 2006 Increase/ (Decrease) % Change Revenues ...Cost of revenues ...Gross profit ...Marketing expenses ...Selling, general and...

  • Page 54
    ...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...

  • Page 55
    ... States, WeightWatchers.com began advertising on television for the first time in fiscal 2007, with its national television advertising campaigns. For NACO, Continental Europe and the United Kingdom, we increased our level of television advertising and experienced higher production costs as a result...

  • Page 56
    ... franchise acquisitions and $31.6 million for capital spending. Net cash used for financing activities totaled $160.1 million. This included the repurchase of 2.8 million shares of our common stock for $116.0 million and dividend payments of $55.0 million. See Item 5 in Part II of this Annual Report...

  • Page 57
    ... in "Item 1. Business- History-Tender Offer and Share Repurchase"), we increased our debt capacity by adding an Additional Term Loan A in the amount of $700.0 million and a new Term Loan B in the amount of $500.0 million. We utilized $185.8 million of these proceeds to pay off the WW.com Credit...

  • Page 58
    ... of our Board of Directors, after taking into account our financial results, capital requirements and other factors it may deem relevant. Our Board of Directors may decide at any time to increase or decrease the amount of dividends or discontinue the payment of dividends based on these factors...

  • Page 59
    ... by Artal. This program currently has no expiration date. As of fiscal year-end 2008, $100.5 million remains available to purchase our shares under this program. From fiscal 2003 through fiscal 2008, we purchased 15.6 million shares of common stock in the open market for a total purchase price of...

  • Page 60
    ... 2008 as opposed to the second quarter of fiscal 2007. 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...

  • Page 61
    ... 15, 2008. We do not expect the adoption of this standard to have a material impact on our financial position, results of operations or on-going cash flows. Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to market risks relating to interest rate changes and...

  • Page 62
    ... principles generally accepted in the United States of America. Our management assessed the effectiveness of our internal control over financial reporting as of January 3, 2009, the end of fiscal 2008. In making this assessment, our management used the criteria set forth by the Committee of...

  • Page 63
    ... over financial reporting that occurred during the most recent fiscal quarter (the fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. 50

  • Page 64
    ... officer and controller, and our employees and directors. Our Code of Business Conduct and Ethics is available on our website at www.weightwatchersinternational.com. In addition, shareholders may request a free copy of the Code of Business Conduct and Ethics from Weight Watchers International...

  • Page 65
    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 66
    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 ...

  • Page 67
    ...the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform...

  • Page 68
    ... revenue ...TOTAL CURRENT LIABILITIES ...Long-term debt ...Deferred income taxes ...Other ...TOTAL LIABILITIES ...Commitments and contingencies (Note 14) SHAREHOLDERS' DEFICIT Dividend to Artal Luxembourg S.A...Common stock, $0 par 1,000,000 shares authorized; 111,988 shares issued ...Treasury stock...

  • Page 69
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE FISCAL YEARS ENDED (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) January 3, 2009 (53 weeks) December 29, 2007 (52 weeks) December 30, 2006 (52 weeks) Meeting fees, net ...Product sales and other, net ......

  • Page 70
    ... hedges, net of taxes of $287 ...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...

  • Page 71
    ... ...Web site development expenditures ...Capitalized software expenditures ...Cash paid for acquisitions ...Other items, net ...Cash used for investing activities ...Financing activities: Proceeds from borrowings ...Payments on long-term debt ...Proceeds from new term loan ...Payment of dividends...

  • Page 72
    ..., EXCEPT PER SHARE AMOUNTS) 1. Basis of Presentation The accompanying consolidated financial statements include the accounts of Weight Watchers International, Inc. and all of its subsidiaries. The term "Company" as used throughout this document is used to indicate Weight Watchers International, Inc...

  • Page 73
    ...line method over their estimated useful lives of 3 to 20 years. The Company accounts for software costs under the American Institute of Certified Public Accountants ("AICPA") Statement of Position No. 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," which...

  • Page 74
    ... meeting fees, such as Monthly Pass, and magazine subscription revenue, is amortized into revenue 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 75
    ... Company uses the cost method to account for investments in which it holds 20% or less of the investee's voting stock and 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...

  • Page 76
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Comprehensive Income (Loss): Comprehensive income (loss) represents the change in shareholders' equity (deficit) resulting from transactions other than...

  • Page 77
    ... material to the Company's consolidated financial position, results of operations, or operating cash flows in any of the periods presented. 4. Joint Venture On February 5, 2008, Weight Watchers Asia Holdings Ltd. ("Weight Watchers Asia"), a direct whollyowned subsidiary of the Company, and Danone...

  • Page 78
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Aggregate amortization expense for finite lived intangible assets was recorded in the amounts of $11,167, $8,335 and $5,025 for the fiscal years ended ...

  • Page 79
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 7. Long-Term Debt The components of the Company's long-term debt are as follows: January 3, 2009 Effective Balance Rate December 29, 2007 Effective ...

  • Page 80
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) agreements). During the first quarter of fiscal 2008, the interest rate on the Term Loan A, Additional Term Loan A and Revolver was reduced to LIBOR ...

  • Page 81
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 8. Treasury Stock On October 9, 2003, the Company, at the direction of its Board of Directors, authorized a program to repurchase up to $250,000 of ...

  • Page 82
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 10. Stock Plans Incentive Compensation Plans: On May 12, 2004 and December 16, 1999, respectively, the Company's shareholders approved the 2004 Stock ...

  • Page 83
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Stock Option Awards Pursuant to the option components of the Stock Plans, the Company's Board of Directors authorized the Company to enter into ...

  • Page 84
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Restricted Stock Units Pursuant to the restricted stock components of the Stock Plans, the Company has granted RSUs to certain employees. The RSUs vest...

  • Page 85
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) The difference between the U.S. federal statutory tax rate and the Company's consolidated effective tax rate are as follows: January 3, 2009 December ...

  • Page 86
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) The Company's undistributed earnings of foreign subsidiaries are not considered to be reinvested permanently. Accordingly, the Company has recorded all...

  • Page 87
    ... by the Compensation and Benefits Committee of the Company's Board of Directors. The account is valued at the end of each fiscal month, based on an annualized interest rate of prime plus 2%, with an annualized cap of 15%. Expense related to this commitment for the fiscal years ended January 3, 2009...

  • Page 88
    ...'s ruling that Weight Watchers meeting fees in the United Kingdom were fully subject to 17.5% VAT and in accordance with Statement of Financial Accounting Standards No. 5, "Accounting for Contingencies" ("SFAS 5"), the Company recorded a charge of approximately $32,500 as an offset to revenue in...

  • Page 89
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) its appeal. Accordingly, we have not recorded any reserves with respect to this matter. If such appeal is unsuccessful, it is possible that the Company...

  • Page 90
    ... SHARE AMOUNTS) Information about the Company's reportable operating segments is as follows: Year Ended January 3, 2009 Weight Watchers International Intercompany Eliminations WeightWatchers.com Consolidated Revenues from external customers ...Intercompany revenue ...Total revenue ...Depreciation...

  • Page 91
    ... TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Year Ended December 30, 2006 Weight Watchers International Intercompany Eliminations WeightWatchers.com Consolidated Revenues from external customers ...Intercompany revenue ...Total revenue ...Depreciation...

  • Page 92
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) January 3, 2009 Long-Lived Assets December 29, December 30, 2007 2006 North America ...United Kingdom ...Continental Europe ...Australia, New Zealand ...

  • Page 93
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) • Level 2-Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not...

  • Page 94
    ...32,500 as an offset to revenue in the second quarter of fiscal 2008. Beginning in the third quarter of fiscal 2008, the Company recorded as an offset to revenue VAT charges associated with U.K. meeting fees as earned, consistent with the aforementioned ruling. These charges were approximately $1,800...

  • 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 JANUARY 3, 2009 Allowance for doubtful accounts ...Inventory reserves,...

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

  • Page 97
    ... key executives (certain executive officers). Principal Stockholders Agreement among Weight 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...

  • Page 98
    ...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, Inc. and Artal Holdings Sp...

  • Page 99
    ... Weight Watchers Executive Profit Sharing Plan, effective as of January 1, 2005 (filed as Exhibit 10.33 to the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 2006, and incorporated herein by reference). Joint Venture Agreement, dated as of February 5, 2008, between...

  • Page 100
    ...Securities 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: March 4, 2009 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. /S/ DAVID P. KIRCHHOFF Date: March 4, 2009 By: David P. Kirchhoff President, Chief Executive Officer and Director (Principal Executive...

  • Page 102
    ...156185) of Weight Watchers International, Inc. of our report dated March 4, 2009 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 March...

  • Page 103
    ... material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /S/ DAVID P. KIRCHHOFF Date: March 4, 2009 Signature: David P. Kirchhoff President, Chief Executive Officer and Director (Principal Executive Officer)

  • Page 104
    ... effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter...

  • 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 ended January 3, 2009, 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 ended January 3, 2009, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ann M. Sardini, certify, pursuant to...

  • Page 107
    ... 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 common stock commenced trading on the New York Stock Exchange, through January 2, 2009, the last trading day of the Company...

  • Page 108
    ... AND SHAREHOLDER INFORMATION The 2009 Annual Meeting of Shareholders of Weight Watchers International, Inc. Location The Carlton Hotel, 88 Madison Avenue, New York, NY 10016 Date Monday, May 11, 2009, at 10:00 a.m. Eastern Time Corporate Headquarters 11 Madison Avenue, 17th Floor, New York, NY 10010...