WeightWatchers 2010 Annual Report Download - page 46

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I
tem 7. Management
’
sD
i
scuss
i
on and Analys
i
so
f
F
i
nanc
i
al
C
ond
i
t
i
on and Results o
fO
perat
i
ons
Y
ou should read the following discussion in conjunction with the “Selected Financial Data” included in
Item 6 of this Annual Report on Form 10-K and our consolidated financial statements and related notes included
in Item 15 of this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve
risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionar
y
statements discussed in “Cautionary Notice Regarding Forward-Looking Statements” and elsewhere in this
Annual Report on Form 10-K should be read as applying to all forward-looking statements wherever they appear
in this Annual Report on Form 10-K. Our actual results could differ materially from those discussed here
.
F
actors that could cause or contribute to these differences include, without limitation, those discussed in “Ris
k
F
actors” included in Item 1A of this Annual Report on Form 10-K
.
O
verv
i
ew
We are a leading, global-branded consumer company and the world’s leading provider of weigh
t
management services, operating globally through a network of Company-owned and franchise operations. With
o
ver four decades of weight management experience, expertise and know-how, we have established Weight
W
atchers as one of the most recognized and trusted brand names among weight-conscious consumers. In 2010
,
consumers spent over
$
4.0 billion on Weight Watchers branded products and services, including meeting
s
conducted by us and our franchisees, products sold at meetings, Internet subscription products sold b
y
W
eightWatchers.com, licensed products sold in retail channels and magazine subscriptions and other
p
ublications
.
We derive our revenues principally from:
•
Meeting fee
s
. Members pay us fees to attend our weekly meetings.
•
Pro
d
uct
s
ale
s
. We sell a range of products that complement our weight management plans, such as
bars, snacks, cookbooks, food and restaurant guides with P
o
int
s
Plu
s
values, Weight Watchers
m
agazines an
d
Po
int
s
Plu
s
c
alculators, primarily to members in our meetings and to our franchisees.
•
I
nternet revenue
s
. We generate revenue from our Internet subscription products and from the sale of
t
hird party Internet advertising
.
•
L
icensing, franchise royalties and other. We license the Weight Watchers brand and our other
i
ntellectual property for certain foods and other relevant consumer products. We also endorse carefull
y
selected branded consumer products. In addition, our franchisees typically pay us a royalty fee of 10
%
o
f their meeting fee revenues. We also generate revenues from subscriptions of our magazines and
t
hird-party advertising in our publications
.
We currently have two operating segments: Weight Watchers International and WeightWatchers.com. All
sources of revenue, other than Internet revenues, are included in our Weight Watchers International operating
segment. Revenues from our Weight Watchers International operating segment comprised 83.4% of our tota
l
r
evenues in fiscal 2010, 8
5
.9% of our total revenues in fiscal 2009 and 87.7% of our total revenues in fiscal 2008.
R
evenues from our WeightWatchers.com operating segment contributed 16.6% of our total revenues in 2010,
14.1% of our total revenues in fiscal 200
9
and 12.3% of our total revenues in fiscal 2008.
30