WeightWatchers 2011 Annual Report Download - page 49

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You 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 cautionary
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.
Factors that could cause or contribute to these differences include, without limitation, those discussed in “Risk
Factors” included in Item 1A of this Annual Report on Form 10-K.
Overview
We are a leading, global-branded consumer company and the world’s leading provider of weight
management services, operating globally through a network of Company-owned and franchise operations. With
almost five decades of weight management experience, expertise and know-how, we have established Weight
Watchers as one of the most recognized and trusted brand names among weight-conscious consumers. In 2011,
consumers spent almost $5 billion on Weight Watchers branded products and services, including meetings
conducted by us and our franchisees, products sold at meetings, Internet 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 of products that complement our weight management plans,
such as bars, snacks, cookbooks, food and restaurant guides with PointsPlus values, Weight Watchers
magazines and PointsPlus calculators, to members in our meetings.
•Internet revenues. We generate revenue from our Internet subscription products and from the sale of
third party Internet advertising.
•Licensing, franchise royalties and other. We license the Weight Watchers brand and our other
intellectual property for certain foods and other relevant consumer products. We also endorse carefully
selected branded consumer products. In addition, our franchisees typically pay us a royalty fee of 10%
of their meeting fee revenues as well as purchase products for sale in their meetings. We also generate
revenues from subscriptions for our magazines and third-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 77.8% of our total
revenues in fiscal 2011, 83.4% of our total revenues in fiscal 2010, and 85.9% of our total revenues in fiscal
2009. Revenues from our WeightWatchers.com operating segment contributed 22.2% of our total revenues in
2011, 16.6% of our total revenues in 2010, and 14.1% of our total revenues in fiscal 2009.
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