WeightWatchers 2011 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    FROM LEFT TO RIGHT Seasame Soy Ginger Arctic C Soba Mango Lime Peanuts Cider Glazed Pork Tenderloin

  • Page 3
    PICTURED LEFT TO RIGHT Ivette lost 94.8 lbs* Robin lost 74 lbs* Jamie lost 62.4 lbs* Danielle lost 48.4 lbs* Valerie lost 82.8 lbs* *People following the Weight Watchers plan can expect to lose 1-2 pounds per week.

  • Page 4
    PICTURED LEFT TO RIGHT Lorie lost 54.2 lbs* Chris lost 111.8 lbs* Debra lost 23.4 lbs* Krista lost 25 lbs* Dwight lost 60.6 lbs* Lauren lost 119 lbs*

  • Page 5
    ... important year for Weight Watchers. The successful launch of our new program platform (known as PointsPlus® in North America and ProPoints® abroad), together with strong advertising and public relations campaigns such as those featuring Jennifer Hudson and the stories of other successful members...

  • Page 6
    ... make smart food decisions a normal part of their day, enabling them to maintain results over the long term. PointsPlus is a simple method that our members can follow to see lasting results. In 2011, U.S. News and World Report ranked Weight Watchers as the "Best Diet Plan for Weight Loss" and the...

  • Page 7
    " The plan taught me that I can still eat the foods I love if I use my allowance wisely without having to cut anything out or feel hungry." Gracie | United Kingdom Lost 36 lbs* *People following the Weight Watchers plan can expect to lose 1-2 pounds per week.

  • Page 8
    iPhone and iPad are trademarks of Apple Inc., registered in the U.S. and other countries. Android is a trademark of Google Inc.

  • Page 9
    ... through eTools and mobile applications in addition to all of the benefits of group support that meetings offer. In 2011, we began to market directly to men. The Weight Watchers for Men campaign, launched in the spring of 2011, communicated to men that there was a way for them to lose weight and...

  • Page 10
    ... surprise that for both 2011 and 2012 U.S. News and World Report ranked Weight Watchers as the "Best Diet Plan for Weight Loss" and the "Best Commercial Diet Plan." In 2012 we also received the top honor in the new category of "Easiest Diet to Follow" in their annual ranking. PICTURED LEFT Popped...

  • Page 11

  • Page 12
    ... the leading, sustainable and affordable method to lose weight and maintain a healthier lifestyle for the long term. I would like to thank all of our members and subscribers, service providers, employees, and directors for their hard work and success throughout the year. We look forward to the...

  • Page 13
    ...1, 2011, the last business day of the registrant's second fiscal quarter of 2011, as quoted on the New York Stock Exchange) was $2,701,865,018. For purposes of this computation, it is assumed that shares of common stock held by our directors, executive officers and our controlling shareholders would...

  • Page 14

  • Page 15
    ... Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters ...Certain Relationships and Related Transactions, and Director Independence ...Principal Accountant Fees and Services ...Exhibits and Financial Statement Schedules...

  • Page 16

  • Page 17
    ... executive 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" refer to Weight Watchers International, Inc. and all of its businesses consolidated for purposes of its financial statements; "Weight Watchers...

  • Page 18
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 19
    ... management plans on the Internet. Weight Watchers eTools is offered for free as part of our Monthly Pass commitment plan, or Monthly Pass, which provides our meetings members with unlimited access to meetings at a discounted monthly rate. We currently offer our two Internet subscription products...

  • Page 20
    ...weight management programs. We believe this growth and awareness is also a result of an increasing willingness of employers and governments to promote and subsidize the cost of weight management programs. Our Services and Products Our Weight Management Plans In each of our markets, we offer services...

  • Page 21
    ...our program in a manner that combines group support and education with a structured approach to food, activity and lifestyle modification developed by credentialed weight management experts. Our more than 12,000 leaders run our meetings and educate members on the Weight Watchers method of successful...

  • Page 22
    ... web-based weight management plans. As of the end of fiscal 2011, WeightWatchers.com had over 1.5 million active Weight Watchers Online subscribers. Weight Watchers eTools is an Internet weight management product available to consumers who are Weight Watchers meetings members. Weight Watchers eTools...

  • Page 23
    ... 3-month term or $14.95 for the initial one-month term. The ongoing monthly fee for Weight Watchers eTools is $14.95. In addition, Weight Watchers eTools is included for free in purchases by consumers of Monthly Pass. Features of Subscription Products We believe WeightWatchers.com's personalized and...

  • Page 24
    ...excel at new product development and have strong marketing and sales expertise, manufacturing and distribution capabilities, financial strength, prior performance in previous licensing and endorsement deals and senior management committed to building the Weight Watchers brand. In connection with our...

  • Page 25
    ... subscription sales and third-party 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 word of mouth generated by our current and former customers...

  • Page 26
    ... WeightWatchers.com 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 third-party advertising, Weight...

  • Page 27
    ... assets and share best practices across geographies. Competition The weight management market includes self-help weight management regimens and other self-help weight management products and publications such as books, tapes and magazines; commercial weight management programs; Internet weight...

  • Page 28
    ... through the domain name dispute resolution system. History Early Development In 1961, Jean Nidetch, our founder, attended a New York City obesity clinic and took what she learned from her personal experience at the obesity clinic and began weight-loss meetings with a group of her overweight friends...

  • Page 29
    ... Offer, the number of its shares of our common stock necessary to keep its current percentage ownership interest in us at substantially the same level after the Pending Tender Offer, a transaction that we refer to in this Annual Report on Form 10-K as the Pending Share Repurchase. Artal Holdings...

  • Page 30
    ...officers, directors and 10 percent shareholders. Usually these are publicly accessible no later than the business day following the filing. We use our website at www.weightwatchersinternational.com as a channel of distribution of material Company information. Financial and other material information...

  • Page 31
    ...to continue to develop innovative new services and products and enhance our existing services and products, or the failure of our services and products to continue to appeal to the market; the effectiveness of our marketing and advertising programs; the impact on the Weight Watchers brand of actions...

  • Page 32
    ... such as 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...

  • Page 33
    .... Also, these Weight Watchers-branded products may be subject to product recalls, litigation or other deficiencies. Any negative publicity associated with these actions would adversely affect our brand and may result in decreased meeting attendance, Internet subscriptions and product sales and, as...

  • Page 34
    ... our meetings, product sales and Internet product subscriptions. The current global economic downturn has led to a decrease in discretionary spending by consumers and loss of consumer confidence. Any reduction in consumer spending may adversely affect our business, financial condition or results of...

  • Page 35
    ... terms, 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...

  • Page 36
    ...FTC filed complaints against a number of commercial weight management providers alleging violations of federal law in connection with the use of advertisements that featured testimonials, claims for program success and program costs. In 1997, we entered into a consent order with the FTC settling all...

  • Page 37
    ... higher operating expenses. As a result, this increased leverage may have a material adverse effect our business, financial condition and results of operations. In addition, if successful, the Pending Tender Offer will reduce our "public float" (the number of shares of our common stock owned by non...

  • Page 38
    ... 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 New York Stock Exchange, or the NYSE, rules, a listed company of which more than 50% of...

  • Page 39
    ...to our UK leaders consistent with this ruling. The reserve at the end of the second quarter of fiscal 2011 equaled approximately $43.7 million in the aggregate based on the exchange rates at the end of fiscal 2011. As of the beginning of the third quarter of fiscal 2011, we employ our UK leaders and...

  • Page 40
    ... this time, we do not expect our results of operations, financial condition or cash flows to be materially adversely affected by this action in any particular period, and we have not made any provision for losses in connection with it. Other Litigation Matters Due to the nature of our activities, we...

  • Page 41
    ... Annual Report on Form 10-K. Set forth below are the names, ages as of December 31, 2011 and current positions of our executive officers and directors. Directors are elected at the annual meeting of shareholders. Executive officers are appointed by, and hold office at, the discretion of our Board...

  • Page 42
    ... Mr. Burwick held several increasingly significant brand development and general management positions with PepsiCo, Inc., a global food and beverage company. Most recently, Mr. Burwick served as Senior Vice President and Chief Marketing Officer of PepsiCo North America Beverages, from September 2008...

  • Page 43
    ...and the Chief Executive Officer of The Invus Group, LLC. Prior to forming The Invus Group, LLC in 1985, Mr. Debbane was a manager and consultant for The Boston Consulting Group in Paris, France. He holds an M.B.A. from Stanford Graduate School of Business, an M.S. in Food Science and Technology from...

  • Page 44
    ... LLC, joined the firm in 1989. He received an M.B.A. from Harvard Business School. He also obtained a B.S. in Industrial Engineering from Purdue University. Mr. Sobecki is a director of Lexicon Pharmaceuticals, Inc. and a number of private companies of which Artal or Invus, L.P. are shareholders. Mr...

  • Page 45
    ... be purchased from time to time in the open market or through privately negotiated transactions. No shares will be purchased from Artal Holdings and its parents and subsidiaries under this program. The repurchase program currently has no expiration date. We repurchased no shares of our common stock...

  • Page 46
    ...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, and "Item 15. Exhibits and Financial Statement Schedules-Financial Statements-Note 6. Long-Term Debt", of this Annual Report on...

  • Page 47
    ... reclassified to retained earnings. Long-Term Debt On January 26, 2007, in connection with our 2007 Tender Offer and share repurchase more fully described under "Item 1. Business-History-2007 Tender Offer and Share Repurchase" in Part I of this Annual Report on Form 10-K, we increased our borrowing...

  • Page 48
    ...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. Working Capital The changes in the working capital deficit are primarily the result of year-over-year increases...

  • Page 49
    ... subscription products sold by WeightWatchers.com, licensed products sold in retail channels and magazine subscriptions and other publications. We derive our revenues principally from: • • Meeting fees. Members pay us fees to attend our weekly meetings. In-meeting product sales. We sell a range...

  • Page 50
    ... of successful new product and program launches, a compound annual growth rate of 2.5%, we experienced a decline in the number of members attending meetings. WeightWatchers.com. From fiscal 2007 through fiscal 2011, our Internet revenues grew at a compound annual growth rate of 27.4%. The increase...

  • Page 51
    ...our cash flows and earnings. These key performance indicators include net revenues, which are an indicator of our overall business growth; paid weeks and attendance metrics; lecture income per paid week and in-meeting product sales per attendee; the number of Weight Watchers Online subscribers; and...

  • Page 52
    ... 2011, a decline of 2.3% on a compound annual growth rate basis. Our worldwide average meeting revenue per attendee, however, has increased over the same period, largely as a result of Monthly Pass' growing penetration in NACO and other markets and growth in product sales per attendee. North America...

  • Page 53
    ... the new program launch and supported by strong marketing and public relations activities, recruitment trends in the first quarter of fiscal 2011 further improved upon the positive trend we experienced in fiscal 2010 and were successful at driving new and existing members into the brand. As a result...

  • Page 54
    ...as the business lapped its program launch in the prior year. Promotional strategies in the first quarter of fiscal 2011 resulted in an increase in Monthly Pass penetration in some Continental European markets, which accounted for a smaller decline in meeting paid weeks versus attendance. While still...

  • Page 55
    ... average growth rate of over 30%. End of period active Online subscribers totaled over 1.6 million at December 31, 2011. This success resulted from a combination of new subscribers in the United States and the United Kingdom and launches of WeightWatchers.com subscription products in new markets...

  • Page 56
    ... information compares results between periods as if exchange rates had remained constant period-overperiod. We use results on a constant currency basis as one measure to evaluate our performance. In this Annual Report on Form 10-K, we calculate constant currency by calculating current-year results...

  • Page 57
    ... 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 58
    ... operating income growth rates for such country. We utilize operating income as the basis for measuring our potential growth because we believe it is the best indicator of the performance of our business. For fiscal 2011, the blended growth rates used in our discounted cash flow analysis ranged from...

  • Page 59
    ...began marketing campaigns for our new program launches which accelerated periodover-period volume growth in the North American and UK meetings and WeightWatchers.com businesses to historically high levels in the first quarter of fiscal 2011. As a result, on a consolidated Company basis, revenues and...

  • Page 60
    ... revenues in fiscal 2008 for current and prior year periods, and which has now been paid, was related to an adverse ruling the Company received with respect to the imposition of UK VAT on meeting fees collected by our UK subsidiary. After adjusting for this charge, fiscal 2011 revenues increased...

  • Page 61
    ... year. Revenue growth in the period was driven by strong momentum beginning at the start of fiscal 2011 from the new program launches at the end of fiscal 2010 in our North American and UK meetings and WeightWatchers.com businesses, and further supported by effective marketing and public relations...

  • Page 62
    ..., our effective marketing campaign strategy which has raised the profile and attraction of our offerings to both former members and new customers, and increased purchases of the Monthly Pass commitment plan. As a result of these factors, NACO meeting paid weeks increased 26.4% in fiscal 2011 versus...

  • Page 63
    ... increased 69.7% in fiscal 2011 versus the prior year. This increase in Online subscribers and paid weeks was driven primarily by continued strong marketing campaigns starting in the second quarter of 2010 in the United States and the United Kingdom, markets which also benefited from the new program...

  • Page 64
    ... in the last week of the year in support of our winter 2012 marketing campaigns. In addition, we opportunistically added marketing in the second quarter of fiscal 2011 to leverage positive public relations, such as our ranking as the number one weight-loss diet by U.S. News & World Report magazine...

  • Page 65
    ...from higher attendances per meeting and strong growth in our higher margin WeightWatchers.com business, where cost of revenues is largely fixed. Marketing expense increased as a percentage of revenues in fiscal 2011 as compared to the prior year, but was offset by the decline in selling, general and...

  • Page 66
    Statements of Income as Reported and Adjusted (In millions, except per share amounts) Fiscal Fiscal Increase/ 2010 2009 (Decrease) % Change Revenues, net (as adjusted)(1) ...UK VAT ruling accrual reversal(1) ...Revenues, net of VAT ruling ...Cost of revenues (as ...UK self-employment tax ruling(2)...

  • Page 67
    ...million in fiscal 2010. As previously reported, the Company recorded a charge of $32.5 million in the fourth quarter of fiscal 2009 related to prior years, as a result of an adverse UK self-employment tax ruling related to the self-employment status of its UK leaders. As the table above shows, after...

  • Page 68
    ... in UK meetings, which held full year global meeting paid weeks at virtually the same level as the prior year, up just 0.4%. In Continental Europe, the launch of our new ProPoints program innovation at the end of fiscal 2009 resulted in enrollment and meeting fees increases throughout the first half...

  • Page 69
    ... the third quarter which continued through the end of the year. In addition, France faced strong competition from a new fad diet. For fiscal 2010, paid weeks in Continental Europe increased by 6.9%, benefiting from enrollment growth early in the year and an increase in Monthly Pass penetration, but...

  • Page 70
    ... the third quarter of fiscal 2010 as compared to the prior year period. With the new program launch in our English-speaking markets, fourth quarter Internet revenues grew by 31.1% versus the prior year period. In addition, WeightWatchers.com launched its two Internet subscription products in Sweden...

  • Page 71
    ... year. After disappointing results from our first quarter marketing, we adopted a new marketing strategy focused on member experience in both the NACO meetings business, featuring Jennifer Hudson, and in the WeightWatchers.com business. As the success of this strategy became apparent, we increased...

  • Page 72
    .... The $10.5 million growth in the working capital deficit in fiscal 2011 versus the fiscal 2010 level, excluding the changes in cash and cash equivalents and the current portion of long-term debt, was comprised of increases in operational and other accrued items in fiscal 2011, partially offset by...

  • Page 73
    ... 2011 resulted from increases in marketing expenses and higher accrued performance-based compensation. In fiscal 2010, payments totaling $29.1 million were made in relation to the accrued liability associated with the previously mentioned adverse UK VAT ruling, thereby decreasing the working capital...

  • Page 74
    ... the cash flow exposure associated with our variable-rate borrowings. The average interest rate on our debt, exclusive of the impact of swaps, was approximately 2.4%, 2.2% and 1.5% per annum at the end of fiscal 2011, 2010 and 2009, respectively. The following schedule sets forth our long-term debt...

  • Page 75
    ... a quarterly cash dividend of $0.175 per share of our common stock every quarter for the past several fiscal years. Any decision to declare and pay dividends in the future will be made at the discretion of our Board of Directors, after taking into account our financial results, capital requirements...

  • Page 76
    ...the table above due to the fact that the Company is unable to estimate the timing of payment for this liability. We currently plan to meet our long-term debt obligations by using cash flows provided by operating activities and opportunistically using other means to repay or refinance our obligations...

  • Page 77
    ... Board of Directors authorized adding $250.0 million to this program. Under this program, we will not purchase shares held by Artal. This program currently has no expiration date. As of fiscal year-end 2011, $208.9 million remains available to purchase shares of our common stock under this program...

  • Page 78
    ... under current accounting standards. This guidance is applicable for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of this guidance is not expected to have a material effect on our consolidated financial position, results of operations or cash flows. In...

  • Page 79
    ... not have a material impact on our financial position, results of operations or cash flows. Subsequent Events On February 23, 2012, we commenced the Pending Tender Offer in which we are seeking to acquire up to $720 million of our common stock at a price between $72.00 and $83.00 per share. Prior to...

  • Page 80
    ...are recorded in shareholders' equity as a component of accumulated other comprehensive income (loss). In addition, exchange rate fluctuations will cause the US dollar translated amounts to change in comparison to prior periods. Item 8. Financial Statements and Supplementary Data This information is...

  • Page 81
    ... over financial reporting as of December 31, 2011 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. Changes in Internal Control Over Financial Reporting There...

  • Page 82
    ... Director Independence; Principal Accountant Fees and Services Information called for by Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K is incorporated by reference from our definitive Proxy Statement to be filed in connection with our 2012 Annual Meeting of Shareholders...

  • Page 83
    ... executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, and that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K of the Exchange Act, will be disclosed on our website...

  • Page 84
    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 85
    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 86
    ... of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was...

  • Page 87
    ...,391 9,973 $ 1,091,987 LIABILITIES AND TOTAL DEFICIT CURRENT LIABILITIES Portion of long-term debt due within one year ...$ 124,933 $ 197,524 Accounts payable ...60,810 39,589 Dividend payable ...13,145 13,158 Salaries and wages payable ...62,705 48,443 UK Self-employment liability ...43,671 40,782...

  • Page 88
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE FISCAL YEARS ENDED (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) December 31, 2011 (52 weeks) January 1, 2011 (52 weeks) January 2, 2010 (52 weeks) Meeting fees, net ...Product sales and other, net ...Internet...

  • Page 89
    ...902) ...Total Comprehensive Income ...Issuance of treasury stock under stock plans ...Tax benefit of restricted stock units vested and stock options exercised ...Cash dividends declared ...Purchase of treasury stock ...Compensation expense on share-based awards ...Balance at December 31, 2011 ...111...

  • Page 90
    ... ...Other items, net ...Cash used for investing activities ...Financing activities: Net (payments)/borrowings on revolver ...Payments on long-term debt ...Payment of dividends ...Tax benefit of restricted stock units vested and stock options exercised ...Deferred financing costs ...Payments to...

  • Page 91
    ... in fiscal years does not have a material effect on the consolidated financial statements. Use of Estimates: The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America ("US GAAP"), requires management to make estimates...

  • Page 92
    ...of these franchise rights acquired in the United States, Canada, United Kingdom, Australia/New Zealand and other countries at December 31, 2011 were $656,638, $70,688, $16,575, $15,171 and $4,954, respectively, totaling $764,026. The Company estimates future cash flows for each unit of accounting by...

  • Page 93
    ... information session and materials it provides to new members in its meetings 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 94
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) WW.com primarily generates revenue from monthly subscriptions for its Internet subscription products. Subscription fee revenues are recognized over the period that...

  • Page 95
    ... 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 and/or modification of the Company's long-term debt. During the fiscal year ended January 1, 2011, the Company...

  • Page 96
    ..., franchise rights acquired decreased due to foreign currency fluctuations. The Company's goodwill by reportable segment at the end of fiscal 2011 and fiscal 2010 was $23,812 and $25,225, respectively, related to the WWI segment and $26,200 related to the WW.com segment for both years, totaling $50...

  • Page 97
    ... Effective Balance Rate Revolver I due 2011 ...Revolver I due 2011 ...Revolver II due 2014 ...Revolver II due 2014 ...Term A Loan due 2011 ...Additional Term A Loan due 2013 ...Term B Loan due 2014 ...Term C Loan due 2015 ...Term D Loan due 2016 ...Total Debt ...Less Current Portion ...Total Long...

  • Page 98
    ... the scheduled amortization. Any such loan modifications would be effective only with respect to such tranche of term loans or revolving loans and only with respect to those lenders that accept the Company's offer. Loan modification offers may be accompanied by increased pricing and/or fees payable...

  • Page 99
    ...from Artal Holdings and its parents and subsidiaries under the program. The repurchase program currently has no expiration date. During the fiscal years ended December 31, 2011 and January 1, 2011, the Company purchased 813 and 3,739 shares of its common stock, respectively, in the open market under...

  • Page 100
    ...Plan (the "2004 Plan") and the 1999 Stock Purchase and Option Plan (the "1999 Plan" and together with the 2008 Plan and the 2004 Plan, the "Stock Plans"). These plans are designed to promote the long-term financial interests and growth of the Company by attracting, motivating and retaining employees...

  • Page 101
    ...The total income tax benefit recognized in the income statement for all share-based compensation arrangements was $2,895, $2,662 and $2,997 for the years ended December 31, 2011, January 1, 2011 and January 2, 2010, respectively. No compensation costs were capitalized. As of December 31, 2011, there...

  • Page 102
    ... to five years. The fair value of RSUs is determined using the closing market price of the Company's common stock on the date of grant. A summary of RSU activity under the Stock Plans for the year ended December 31, 2011 is presented below: Weighted-Average Grant-Date Fair Value Shares Outstanding...

  • Page 103
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 10. Income Taxes The following tables summarize the Company's consolidated provision for US federal, state and foreign taxes on income: December 31, 2011 January ...

  • Page 104
    ...Company's consolidated balance sheets are as follows: December 31, 2011 January 1, 2011 Provision for estimated expenses ...Operating loss carryforwards ...Salaries and wages ...Share-based compensation ...Other comprehensive income ...Other ...Less: valuation allowance ...Total deferred tax assets...

  • Page 105
    ... Profit Sharing Plan has a discretionary supplemental employer contribution component that is determined annually by the Compensation and Benefits Committee of the Company's Board of Directors. Expense related to these contributions for the fiscal years ended December 31, 2011, January 1, 2011 and...

  • Page 106
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 13. Commitments and Contingencies UK Self-Employment Matter In July 2007, Her Majesty's Revenue and Customs ("HMRC") issued to the Company notices of determination...

  • Page 107
    ... inherently unpredictable. At this time, the Company does not expect its results of operations, financial condition or cash flows to be materially adversely affected by this action in any particular period, and the Company has not made any provision for losses in connection with it. Other Litigation...

  • Page 108
    ... activity is eliminated in consolidation. Information about the Company's reportable operating segments is as follows: Year Ended December 31, 2011 Intercompany WW.com Eliminations Consolidated WWI Revenues from external customers ...Intercompany revenue ...Total revenue ...Depreciation...

  • Page 109
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Year Ended January 2, 2010 Intercompany WW.com Eliminations WWI Consolidated Revenues from external customers ...Intercompany revenue ...Total revenue ......

  • Page 110
    ... of the Company's derivative financial instruments: Fair Value Measurements Using: Total Fair Value Quoted Prices in Significant Active Markets Significant Other Unobservable for Identical Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Interest rate swap asset at December 31, 2011...

  • Page 111
    ...comprehensive income (loss) at December 31, 2011, based on current market rates, will be reclassified into earnings within the next 12 months. 17. Quarterly Financial Information (Unaudited) The following is a summary of the unaudited quarterly consolidated results of operations for the fiscal years...

  • Page 112
    ... under current accounting standards. This guidance is applicable for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of this guidance is not expected to have a material effect on the consolidated financial position, results of operations or cash flows of...

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    ...with Artal Holdings whereby Artal Holdings agreed to sell to the Company, at the same price as was determined in the Pending Tender Offer, the number of its shares of the Company's common stock necessary to keep its current percentage ownership interest in the Company at substantially the same level...

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    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 31, 2011 Allowance for doubtful accounts... applicable. S-1

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  • Page 117
    ... Statement on Form S-4 (File No. 333-92005) as filed on December 2, 1999, and incorporated herein by reference). 1999 Stock Purchase and Option Plan of Weight Watchers International, Inc. and Subsidiaries (filed as Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year...

  • Page 118
    ...Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2005 (File No. 001-16769), and incorporated herein by reference). Form of Term Sheet for Employee Stock Awards and Form of Terms and Conditions for Employee Stock Awards for the 1999 Stock Purchase and Option Plan of Weight...

  • Page 119
    ... Annual Report on Form 10-K for the fiscal year ended December 29, 2007 (File No. 001-16769), and incorporated herein by reference). Share Purchase Agreement, dated April 27, 2011, between Danone Dairy Asia and Weight Watchers Asia Holdings Ltd. (filed as Exhibit 10.1 to the Company's Current Report...

  • Page 120
    ...). Subsidiaries of Weight Watchers International, Inc. Consent of Independent Registered Public Accounting Firm. Rule 13a-14(a) Certification by David P. Kirchhoff, President and Chief Executive Officer. Rule 13a-14(a) Certification by Ann M. Sardini, Chief Financial Officer. Certification pursuant...

  • Page 121
    ... 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 28, 2012 By: /S/ DAVID P. KIRCHHOFF David P. Kirchhoff President, Chief Executive Officer and Director...

  • Page 122
    ...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: February 28, 2012 By: David P. Kirchhoff President, Chief Executive Officer and Director (Principal Executive...

  • Page 123
    ...) of Weight Watchers International, Inc. of our report dated February 29, 2012 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP New York, New York...

  • Page 124

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    ... with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the...

  • Page 126
    ... with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the...

  • Page 127
    ... TO 18 U.S.C. SECTION 1350 In connection with the Annual Report on Form 10-K of Weight Watchers International, Inc. (the "Company") for the fiscal year ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David P. Kirchhoff, certify...

  • Page 128
    ...TO 18 U.S.C. SECTION 1350 In connection with the Annual Report on Form 10-K of Weight Watchers International, Inc. (the "Company") for the fiscal year ended December 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ann M. Sardini, certify, pursuant...

  • Page 129
    ... 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 December 30, 2011, the last trading day of the Company's fiscal year, as...

  • Page 130
    ... and Shareholder Information The 2012 Annual Meeting of Shareholders of Weight Watchers International, Inc. LOCATION The Carlton Hotel 88 Madison Avenue, New York, NY 10016 DATE Tuesday, May 8, 2012 at 10:00 a.m. Eastern Time CORPORATE HEADQUARTERS 11 Madison Avenue, 17th Floor New York, NY...