WeightWatchers 2013 Annual Report Download

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2013 annual report

Table of contents

  • Page 1
    2013 annual report

  • Page 2
    top of the world and I didn't need to be perfect to get there. Jessica Simpson USA I feel like I'm on

  • Page 3
    ... its 50-year history, Weight Watchers has helped millions of members lose weight through its effective, affordable and accessible program. The Weight Watchers program is one of the most clinically studied commercial weight management programs in history, with more than 80 peer-reviewed publications...

  • Page 4
    ...the study found that among those participants who engaged with Weight Watchers across multiple touch points - for example, attending meetings and using online and mobile tools - the success rate was even higher. In short, the more touch points, the better the result. Science continues to support our...

  • Page 5
    Weight Watchers isn't a diet to me. It's a way of life! Dustin USA, lost 100 lbs* Weight Watchers Mobile App iOS & Android *People following the Weight Watchers plan can expect to lose 1-2 pounds per week.

  • Page 6
    support each other. Tracey UK I love the Weight Watchers community because we all Clockwise from top: Tracey lost 172 Tim lost 33 Melissa lost 67 Sophie lost 33 lbs* lbs* lbs* lbs* *People following the Weight Watchers plan can expect to lose 1-2 pounds per week.

  • Page 7
    ... #1 for Best Weight Loss Diet, Easiest Diet to Follow and Best Commercial Diet Plan by U.S. News and World Report. innovate in a changing market, leveraging a deep understanding of consumer needs. We are moving away from a hard distinction between our meetings business and Online business, and we...

  • Page 8
    ... ahead of us, the potential of our business and the power of the Weight Watchers brand, and I am confident that we have the strategic plan and team in place to transform the Company and position it for growth over the long term. Sincerely, James R. Chambers President & Chief Executive Officer

  • Page 9
    ... of common stock as of June 28, 2013, the last business day of the registrant's second fiscal quarter of 2013, as quoted on the New York Stock Exchange) was $1,254,625,620. For purposes of this computation, it is assumed that shares of common stock held by our directors, executive officers and our...

  • Page 10
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  • Page 11
    ... Directors of the Company ... 1 15 22 22 23 23 24 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 of Operations ...Item...

  • Page 12
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  • Page 13
    ...of its financial statements; "Weight Watchers International" and "WWI" refer to Weight Watchers International, Inc. and all of the Company's businesses other than WeightWatchers.com; "WeightWatchers.com" refers to WeightWatchers.com, Inc. and all of the Company's Internet-based businesses; and "NACO...

  • Page 14
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 15
    ... or on their mobile device. 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 in eleven...

  • Page 16
    ... eating habits. In 2013 we introduced the Weight Watchers 360° plan, which also built upon the benefits of the PointsPlus system by adding education and tools for customers to navigate environments in which they live day-to-day and behavioral steps and strategies to develop routines to help...

  • Page 17
    ... supporting products and digital tools as appropriate. At the end of each meeting, members are encouraged to define a personal, short-term goal for the coming week. Immediately following each meeting, new members are given an orientation to our current weight management plans. Our leaders help set...

  • Page 18
    ... 2013, 27.8% of our total revenues in fiscal 2012 and 22.2% of our total revenues in fiscal 2011. Subscription Products Weight Watchers Online is a product based on the Weight Watchers approach to weight management and is designed to attract self-help-inclined consumers. Weight Watchers Online helps...

  • Page 19
    ..., resources and interactive web-based weight management plans. As of the end of fiscal 2013, WeightWatchers.com had over 1.7 million active Weight Watchers Online subscribers. Weight Watchers eTools is an Internet weight management product available to consumers who are Weight Watchers meetings...

  • Page 20
    ... fiscal 2011, provide Monthly Pass purchasers and Weight Watchers Online subscribers with access to a suite of weight-loss tools, such as recipe and tracking tools, as well as other helpful content. In fiscal 2010, we launched our initial iPad®-optimized application, and a universal application was...

  • Page 21
    ... 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. Our licensing and endorsement arrangements give us access to weight-conscious consumers through products sold at retail and increase...

  • Page 22
    ... brand and the effectiveness of our plans, enable us to efficiently attract new and returning customers. Public Relations We carry out many of our key public relations initiatives through the efforts of current and former Weight Watchers leaders, members and subscribers, including from time to time...

  • Page 23
    ... subscription products, the website contributes value to our meetings business by promoting our brand, advertising Weight Watchers meetings, assisting in locating meetings and keeping members involved with Weight Watchers outside of meetings through useful offerings, such as healthy recipes, weight...

  • Page 24
    not comparable to us. For example, many of these competitors' businesses are based on the sale of pre-packaged meals and meal replacements. Our meetings use group support, education and behavior modification to help our members change their eating habits, in conjunction with flexible food plans that...

  • Page 25
    ... 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 in "Item 1A. Risk Factors" of this Annual Report...

  • Page 26
    ... our 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, our corporate Facebook page (www.facebook.com/weightwatchers) and our corporate Twitter account...

  • Page 27
    ... services and products to continue to appeal to the market, or our ability to successfully expand into new channels of distribution; the ability to successfully implement new strategic initiatives; the effectiveness of our marketing and advertising programs; the impact on the Weight Watchers brand...

  • Page 28
    ...Analysis of Financial Condition and Results of Operations," could cause our results to differ materially from those expressed or suggested in any forward-looking statement...-looking statements to reflect new information or events or circumstances that occur after the date of this Annual Report on ...

  • Page 29
    ... increased trial of free mobile and other weight management applications and activity monitors. Any decrease in demand for our services and products may adversely affect our business, financial condition or results of operations. If we do not continue to develop innovative new services and products...

  • Page 30
    ... our strategic initiatives, our business activities, financial condition and results of operations may be adversely affected. Our business depends on the effectiveness of our marketing and advertising programs to attract and retain members and subscribers. Our business success depends on our ability...

  • Page 31
    ... that is either developed by us or licensed from or maintained by third parties to operate our websites, subscription offerings and other products and services such as the recurring billing system associated with certain of our commitment plans, and to support our business operations. As much of...

  • Page 32
    ... and pay expenses. We do not currently hedge, and have not historically hedged, our operational exposure to foreign currency fluctuations. Our consolidated financial results are presented in US dollars and therefore, during times of a strengthening US dollar, our reported international revenues and...

  • Page 33
    ... year-toyear comparability of our quarterly results. Any event that discourages or impedes people from gathering with others or accessing resources could adversely affect our business. Our meeting and Internet operations are subject to conditions beyond our control that may prevent or impede current...

  • Page 34
    ...ability to compete effectively, increase our costs or harm our business. Our reputation and the appeal of our services and product offerings may be harmed by security breaches or privacy concerns. Breaches of security could result in unauthorized access to proprietary or customer information or data...

  • Page 35
    ..., state or foreign agency, or a court in connection with a governmental enforcement action or private litigation, that any of our practices do not meet existing or new laws or regulations could result in liability, adverse publicity, and restrictions of our business operations. For example, during...

  • Page 36
    ... 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 with our US back-office and customer support operations located...

  • Page 37
    ...of the ordinary course of business. In the opinion of management, based in part upon advice of legal counsel, the disposition of any such matters is not expected to have a material effect on our results of operations, financial condition or cash flows. However, the results of legal actions cannot be...

  • Page 38
    ... Annual Report on Form 10-K. Set forth below are the names, ages as of December 28, 2013 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 39
    ... product management and project management positions for the central buying office of Le Printemps department stores from 1987 to 2001. Ms. Pollier is a graduate of HEC Business School Paris. Raymond Debbane. Mr. Debbane has been the Chairman of our Board of Directors since our acquisition by Artal...

  • Page 40
    ...a director and member of the Compensation Committee of Lexicon Pharmaceuticals, Inc. and a number of private companies of which Artal or Invus, L.P. are shareholders. Marsha Johnson Evans. Ms. Evans has been a director since February 2002. Ms. Evans served as President and Chief Executive Officer of...

  • Page 41
    ...and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources-Long-Term Debt". The repurchase of shares of common stock under the Tender Offer and from Artal Holdings pursuant to the Purchase Agreement was not made pursuant to the Company's existing repurchase program...

  • Page 42
    ... years. SELECTED FINANCIAL DATA (in millions, except per share amounts) Fiscal 2013 (52 weeks) Fiscal 2012 (52 weeks) Fiscal 2011 (52 weeks) Fiscal 2010 (52 weeks) Fiscal 2009 (52 weeks) Revenues, net(1) ...Net income attributable to the Company ...Working capital (deficit) ...Total assets ...Long...

  • Page 43
    ... aggregate based on the exchange rates at the end of the fourth quarter of fiscal 2012. In January 2013, $6.8 million was paid to HMRC, representing the balance due over the approximately $30.0 million paid to HMRC in February 2012, and the balance of the reserve was used to pay associated costs. UK...

  • Page 44
    ... revolving credit facility and to obtain new commitments for the borrowing of an additional $1,449.4 million of term loans to finance the purchases of shares of our common stock in the Tender Offer and from Artal Holdings pursuant to the Purchase Agreement. Following the amendment of the Prior WWI...

  • Page 45
    ... The changes in the working capital deficit are primarily the result of year-over-year increases related to cash in connection with operations and a decrease in the current portion of long-term debt related to the refinancing of our credit facilities as well as the shift in timing of tax payments...

  • Page 46
    ... 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. • Prior to fiscal 2014, we had two reporting segments: Weight Watchers International and WeightWatchers.com...

  • Page 47
    ... new country launches which further drove growth in our subscriber base. In fiscal 2012, first-time dedicated television advertising coupled with effective marketing campaigns in Canada and Continental Europe primarily drove strong Online paid weeks growth in the year. Although our active Online...

  • Page 48
    ... of our cash flows and earnings. These key performance indicators include net revenues; paid weeks and attendance metrics; meeting fees per paid week and in-meeting product sales per attendee; the number of end of period Monthly Pass active subscribers and active Online subscribers; and gross...

  • Page 49
    ... in Company-owned operations for a given period. For Weight Watchers Online, paid weeks is the total paid Weight Watchers Online subscriber weeks for a given period. For meetings, paid weeks is the sum of total paid commitment plan weeks (e.g., Monthly Pass weeks) and total "pay-as-you-go" weeks for...

  • Page 50
    ... end of fiscal 2013, a compound annual growth rate of 23.0%. This successful growth resulted primarily from a combination of new subscribers in our major markets and launches of WeightWatchers.com subscription products in three new markets. In addition, WeightWatchers.com, like the meetings business...

  • Page 51
    ... introducing Monthly Pass in the small accounts portion of its corporate business, drove a meeting paid weeks decline of 6.0% and an attendance decline of 11.9%, and also resulted in entering the second quarter of fiscal 2012 with a lower meeting membership base, as compared to the prior year period...

  • Page 52
    ... by entering fiscal 2012 with a higher active member base than the prior year and the benefit of higher enrollment growth from the launch of the updated version of ProPoints in late fiscal 2011 and early fiscal 2012, effective new marketing strategies and an increase in Monthly Pass penetration. For...

  • Page 53
    ...: Anticipated Business Metrics, Trends and Other Events Due to increasing competitive pressures, including the impact of the increasing consumer trial of activity monitors and free apps in the commercial weight loss category, and less impactful marketing of our new twoweek starter plan, Simple Start...

  • Page 54
    ... litigation. In fiscal 2011, the operating income margin of the Company was 29.8%, the highest in the five-year period. This was despite the increased marketing in WeightWatchers.com stemming from the initiative focused on building awareness and relevance of the Weight Watchers brand with the male...

  • Page 55
    ... in the prior year. This decline in operating income margin was primarily driven by costs related to first time Online TV marketing campaigns in several of our international markets and our significant investment in marketing the Weight Watchers Online product to men in the United States, as well as...

  • Page 56
    ... agreements and selling advertising space in and copies of its magazines. Monthly Pass, prepaid meeting fees and magazine subscription revenue is recorded to deferred revenue and amortized into revenue over the period earned. Revenue from "payas-you-go" meeting fees, product sales, commissions...

  • Page 57
    ...growth of approximately 50%. We then discount the estimated future cash flows utilizing a discount rate which is calculated using the average cost of capital, which includes the cost of equity and the cost of debt. The cost of equity is determined by combining a risk-free rate of return and a market...

  • Page 58
    ... Annual Report on Form 10-K. RESULTS OF OPERATIONS FOR FISCAL 2013 (52 weeks) COMPARED TO FISCAL 2012 (52 weeks) OVERVIEW Fiscal 2012 was a year of modest revenue growth of 0.4%, with growth in the Online business almost fully offset by declines in the meetings business. In fiscal 2012, total paid...

  • Page 59
    ... of Selected Financial Data as Reported and Adjusted (In millions, except per share amounts) Fiscal Fiscal Increase/ 2013 2012 (Decrease) % Change Revenues ...Cost of revenues (as adjusted)(1) ...UK Self-employment settlement(1) ...Cost of revenues ...Gross Profit ...Gross Margin % ...Marketing...

  • Page 60
    ... prior year. The revenue decline in the meetings business was partially offset by revenue growth in WeightWatchers.com which benefited from a higher active Online subscriber base at the start of fiscal 2013 as compared to the start of fiscal 2012 that offset in part the impact of declining sign-ups...

  • Page 61
    ... prior year. With the benefit of starting fiscal 2013 with a higher active Online subscriber base, WeightWatchers.com experienced growth of 1.7% in Online paid weeks versus the prior fiscal year. The increase in Online paid weeks did not fully offset the decline in meeting paid weeks, resulting in...

  • Page 62
    ... our new Weight Watchers 360° plan in December 2012, this new program was not as effective in driving consumer trial as our PointsPlus innovation. Partially offsetting the decline in NACO meeting fees was a 0.6% increase in meeting fees per paid week in fiscal 2013 as compared to the prior year...

  • Page 63
    ... year. This increase was the result of strong sales of consumables in Continental Europe driven in part by new product introductions and successful promotions. Internet Revenues Internet revenues, which include subscription revenues from sales of our Weight Watchers Online and Weight Watchers eTools...

  • Page 64
    ...a Weight Watchers Online US men's specific marketing campaign, achieving lower and more efficient digital marketing spend in the United States in fiscal 2013 and lower TV advertising and production costs globally. Marketing expenses as a percentage of revenue were 17.1% in fiscal 2013 as compared to...

  • Page 65
    ... by the absence of a Weight Watchers Online US men's specific marketing campaign, achieving lower and more efficient digital marketing spend in the United States in fiscal 2013 and lower TV advertising and production costs globally versus fiscal 2012. In fiscal 2013, marketing expenses decreased as...

  • Page 66
    ... Fiscal 2011 was a year of revenue and volume growth in all fiscal quarters as compared to the prior year periods. We experienced accelerated period-over-period volume growth in our North American and UK meetings and Weight Watchers.com businesses throughout the year. The momentum of our new program...

  • Page 67
    ... of Selected Financial Data as Reported and Adjusted (In millions, except per share amounts) Fiscal Fiscal Increase/ 2012 2011 (Decrease) % Change Revenues ...Cost of revenues (as adjusted)(1) ...UK Self-employment settlement(1) ...Cost of revenues ...Gross Profit ...Gross Margin % ...Marketing...

  • Page 68
    ... of starting the fiscal year with a higher active Online subscriber base and effective marketing, WeightWatchers.com experienced growth of 26.7% in Online paid weeks, as well as an 18.0% increase in end of period active Online subscribers, in fiscal 2012 versus the prior year. The increase in Online...

  • Page 69
    ... decline in meeting paid weeks primarily resulted from lower enrollments in fiscal 2012 as compared to the high enrollment levels in the prior year. Lower enrollments in fiscal 2012 were driven in part by the execution challenges associated with introducing Monthly Pass to the small accounts portion...

  • Page 70
    ... paid weeks was driven by higher enrollments in fiscal 2012 as compared to the prior year. These higher enrollments were the result of effective new marketing strategies in this region. In Continental Europe, attendance increased by 3.3% in fiscal 2012 versus the prior year. In-Meeting Product Sales...

  • Page 71
    ... of a higher active Online subscriber base at the start of fiscal 2012, up 50.5%, versus the beginning of fiscal 2011, and effective marketing campaigns in North America and Continental Europe contributed to Online paid weeks growth of 26.7% in fiscal 2012 versus the prior year. Additionally, end of...

  • Page 72
    ... campaigns in several of our international markets and our significant investment in marketing the Weight Watchers Online product to men in the United States. Both marketing expenses and selling, general and administrative expenses increased as a percentage of revenue in fiscal 2012 as compared...

  • Page 73
    ... other operational items that resulted in the net decrease of $24.7 million to the working capital deficit included a $9.8 million decrease in deferred revenue from declines in our Online and Monthly Pass active bases, a $6.3 million decrease in the derivative payable, a $1.3 million increase in...

  • Page 74
    ... the result of lower net income in fiscal 2013 as compared to the prior year offset by the non-cash early extinguishment of debt charge and the intangible and long-lived asset impairment charges in fiscal 2013 as well as a payment to HMRC in fiscal 2012 in connection with the previously reported UK...

  • Page 75
    ... of the Tender Offer and the related Artal Holdings share repurchase. In addition, we paid $52.0 million of dividends to our shareholders and received $12.7 million in proceeds from stock options exercised in fiscal 2012. Fiscal 2011 Net cash used for financing activities totaled $352.0 million in...

  • Page 76
    ... swing line loans and letters of credit) will be used for working capital and general corporate purposes. At the end of fiscal 2013, fiscal 2012 and fiscal 2011, our debt consisted entirely of variable-rate instruments. Interest rate swaps were entered into to hedge a portion of the cash flow...

  • Page 77
    ... our revolving credit facility and to obtain new commitments for the borrowing of an additional $1,449.4 million of term loans to finance the purchases of shares of our common stock in the Tender Offer and from Artal Holdings pursuant to the Purchase Agreement. Immediately prior to the amendment of...

  • Page 78
    ... the related fees and expenses. On April 9, 2012, we borrowed an aggregate of approximately $723.4 million under the Term E Loan to finance the purchase of shares from Artal Holdings. Dividends On October 30, 2013, we announced that we suspended our quarterly cash dividend. As a result, no dividend...

  • Page 79
    ... 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. During the twelve months ended December 28, 2013 and December 29, 2012...

  • Page 80
    ... and dividend payment obligations and working capital requirements and to comply with all of the financial covenants under our debt agreements depends on our future operations, performance and cash flow. These are subject to prevailing economic conditions and to financial, business and other...

  • Page 81
    ... hedge accounting and, therefore, changes in the fair value of this swap have been recorded in accumulated other comprehensive income (loss). As of the end of fiscal 2013, based on the amount of our variable rate debt and the interest rate swap agreement at that time, a hypothetical 50 basis point...

  • Page 82
    ... accordance with accounting principles generally accepted in the United States of America. Our management assessed the effectiveness of our internal control over financial reporting as of December 28, 2013, the end of fiscal 2013. In making this assessment, our management used the criteria set forth...

  • Page 83
    ..., our internal control over financial reporting. Item 9B. Other Information On February 13, 2014, in connection with its cost saving initiative, the Company committed to a plan of termination which will result in the elimination of certain positions and employees worldwide. The Company determined...

  • Page 84
    ...Officers and Corporate 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 Information called for by Items...

  • Page 85
    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 86
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  • Page 87
    ... REGISTERED PUBLIC ACCOUNTING FIRM Items 15(a) (1) & (2) Pages Report of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets at December 28, 2013 and December 29, 2012 ...Consolidated Statements of Income for the fiscal years ended December 28, 2013, December 29, 2012 and...

  • Page 88
    ..., the financial position of Weight Watchers International, Inc. and its subsidiaries (the "Company") at December 28, 2013 and December 29, 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 28, 2013 in conformity with accounting...

  • Page 89
    ... intangible assets, net ...Deferred financing costs, net ...Other noncurrent assets ...TOTAL ASSETS ...LIABILITIES AND TOTAL DEFICIT CURRENT LIABILITIES Portion of long-term debt due within one year ...Accounts payable ...Salaries and wages payable ...Accrued marketing and advertising ...Accrued...

  • Page 90
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE FISCAL YEARS ENDED (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) December 28, 2013 (52 weeks) December 29, 2012 (52 weeks) December 31, 2011 (52 weeks) Meeting fees, net ...Product sales and other, net ......

  • Page 91
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN THOUSANDS) December 28, 2013 (52 weeks) December 29, 2012 (52 weeks) December 31, 2011 (52 weeks) Net income ...Other comprehensive income: Foreign currency translation adjustments ...Income tax...

  • Page 92
    ...share-based awards ...Balance at December 31, 2011 ...111,988 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 ...Tender Offer fees ...Compensation...

  • Page 93
    ..., 2012 (52 Weeks) December 31, 2011 (52 Weeks) Operating activities: Net income ...Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization ...Amortization of deferred financing costs ...Impairment of intangible and long-lived assets ...Share-based...

  • Page 94
    ... financial statements of Weight Watchers China Limited. Revisions: The Company identified a correction in the statements of cash flows for the year ended 2012 and 2011 as it relates to foreign currency activity, resulting in a reclassification between accrued liabilities and effect of exchange rate...

  • Page 95
    ... translated into US dollars using the exchange rate in effect at the end of each reporting period. Income statement accounts are translated at the average rate of exchange prevailing during each reporting period. Translation adjustments arising from the use of differing exchange rates from period to...

  • Page 96
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Impairment of Long Lived Assets: The Company reviews long-lived assets, including amortizable intangible assets, for impairment whenever events or changes in ...

  • Page 97
    ... agreements and selling advertising space in and copies of its magazines. Monthly Pass, prepaid meeting fees and magazine subscription revenue is recorded to deferred revenue and amortized into revenue over the period earned. Revenue from "payas-you-go" meeting fees, product sales, commissions...

  • Page 98
    ... 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 December 28, 2013, the Company...

  • Page 99
    ... (as defined in Note 7). The Company wrote-off fees in connection with the Tender Offer which resulted in the Company recording a charge of $1,328 in early extinguishment of debt. During the fiscal year ended January 1, 2011, the Company incurred deferred financing costs of $11,483 associated with...

  • Page 100
    ... WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) On July 15, 2013, the Company acquired substantially all of the assets of its West Virginia franchisee, Weight Watchers of West Virginia, Inc., for a net purchase price...

  • Page 101
    ... charge noted above and the effect of exchange rate changes as follows: WWI Segment WW.com Segment Total Balance as of December 29, 2012 ...Franchise rights acquired during the year ...Impairment charge ...Effect of exchange rate changes ...Balance as of December 28, 2013 ... $774,514 34,501 (1,166...

  • Page 102
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) The carrying amount of finite-lived intangible assets as of December 28, 2013 and December 29, 2012 was as follows: December 28, 2013 Gross Carrying Accumulated ...

  • Page 103
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 6. Long-Term Debt The components of the Company's long-term debt were as follows: December 28, 2013 Effective Balance Rate December 29, 2012 Effective Balance Rate...

  • Page 104
    ... (including swing line loans and letters of credit) will be used for working capital and general corporate purposes. Borrowings under the New Credit Agreement bear interest at a rate equal to, at the Company's option, LIBOR plus an applicable margin or a base rate plus an applicable margin. LIBOR...

  • Page 105
    ... the fiscal year ended December 31, 2011, the Company purchased 814 shares of its common stock in the open market under the repurchase program for a total cost of $31,550. The repurchase of shares of common stock under the Tender Offer and from Artal Holdings pursuant to the Purchase Agreement was...

  • Page 106
    ...following table sets forth the computation of basic and diluted EPS for the fiscal years ended: December 28, 2013 December 29, 2012 December 31, 2011 Numerator: Net income attributable to Weight Watchers International, Inc...Denominator: Weighted average shares of common stock outstanding ...Effect...

  • Page 107
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Under the 2004 Plan, grants may take the following forms at the Company's Board of Directors or its committee's sole discretion: non-qualified stock options, ...

  • Page 108
    ...components of the Stock Plans, the Company's Board of Directors authorized the Company to enter into agreements under which certain employees received stock options with both time and performance vesting criteria ("T&P Vesting Options"). The options are exercisable based on the terms outlined in the...

  • Page 109
    ... 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 28, 2013 is presented below: Weighted-Average Grant-Date Fair Value Shares Outstanding at December 29...

  • Page 110
    ... on the Company's consolidated balance sheets are as follows: December 28, 2013 December 29, 2012 Provision for estimated expenses ...Operating loss carryforwards ...Salaries and wages ...Share-based compensation ...Other ...Less: valuation allowance ...Total deferred tax assets ...Depreciation...

  • Page 111
    ... earnings of foreign subsidiaries. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: December 28, December 29, December 31, 2013 2012 2011 Balance at beginning of year ...Additions based on tax positions related to the current year ...Additions based...

  • Page 112
    .... 12. Cash Flow Information December 28, 2013 December 29, 2012 December 31, 2011 Net cash paid during the year for: Interest expense ...Income taxes ...Noncash investing and financing activities were as follows: Fair value of net assets/(liabilities) acquired in connection with acquisitions...

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    ... a material effect on the Company's results of operations, financial condition or cash flows. Lease Commitments Minimum rental commitments under non-cancelable operating leases, primarily for office and rental facilities, at December 28, 2013, consist of the following: 2014 ...2015 ...2016 ...2017...

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    ... and is reviewed regularly by the chief operating decision maker. All intercompany activity is eliminated in consolidation. Information about the Company's reportable operating segments is as follows: Year Ended December 28, 2013 Intercompany WW.com Eliminations Consolidated WWI Total revenue...

  • Page 115
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Year Ended December 31, 2011 Intercompany WW.com Eliminations Consolidated WWI Total revenue ...Depreciation and amortization ...Operating income ...Interest ...

  • Page 116
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Effective the first day of fiscal 2014 (i.e. December 29, 2013), the Company realigned its organizational structure to better leverage its significant assets and ...

  • Page 117
    ... the next seven years. The Company expects approximately $12,017 ($19,700 before taxes) of derivative losses included in accumulated other comprehensive income (loss) at December 28, 2013, based on current market rates, will be reclassified into earnings within the next 12 months. 17. Accumulated...

  • Page 118
    ...for income taxes Net income (a) Amounts in parentheses indicate debits to profit / loss 18. Quarterly Financial Information (Unaudited) The following is a summary of the unaudited quarterly consolidated results of operations for the fiscal years ended December 28, 2013 and December 29, 2012. March...

  • Page 119
    WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) wrote-off $1,328 of fees in connection with the March 2012 refinancing of its debt that the Company recorded as an early extinguishment of debt charge. As ...

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    ... to Charged Costs and to Other Expenses Accounts Balance at End of Period Deductions(1) FISCAL YEAR ENDED DECEMBER 28, 2013 Allowance for doubtful accounts ...Inventory and other reserves ...Tax valuation allowance ...FISCAL YEAR ENDED DECEMBER 29, 2012 Allowance for doubtful accounts ...Inventory...

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  • Page 123
    ... Statement on Form S-4, as filed on December 2, 1999 (File No. 333-92005), 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 ended...

  • Page 124
    ...Continuity Agreement, between Weight Watchers International, Inc. and certain key executives (Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and General Counsel) (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2011...

  • Page 125
    ... and Restated Weight Watchers Executive Profit Sharing Plan, August 1, 2012 (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 29, 2012, as filed on November 8, 2012 (File No. 001-16769), and incorporated herein by reference). Offer Letter...

  • Page 126
    ...Term Sheet for Employee Performance Stock Option Awards and Form of Terms and Conditions for Employee Performance Stock Option Awards for the Weight Watchers International, Inc. 2008 Stock Incentive Plan (for certain executive officers party to continuity agreements). Form of Term Sheet for Employee...

  • Page 127
    ...the 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: February 26, 2014 By: /S/ JAMES CHAMBERS James Chambers President, Chief Executive Officer and Director...

  • Page 128
    ...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/ JAMES CHAMBERS Date: February 26, 2014 By: James Chambers President, Chief Executive Officer and Director (Principal Executive Officer...

  • Page 129
    ...) of Weight Watchers International, Inc. of our report dated February 26, 2014 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...

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  • Page 131
    ... 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 132
    ... 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 133
    ...2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /S/ JAMES CHAMBERS Date: February 26, 2014 Signature: James Chambers President, Chief Executive Officer and Director (Principal Executive Officer...

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  • Page 137
    Stock Performance Graph The following graph sets forth the cumulative return on Weight Watchers International common stock from January 2, 2009, the last trading day of the Company's 2008 fiscal year, through December 27, 2013, the last trading day of the Company's 2013 fiscal year, as compared to...

  • Page 138
    ... and Shareholder Information The 2014 Annual Meeting of Shareholders of Weight Watchers International, Inc. LOCATION Weight Watchers International, Inc. 675 Avenue of the Americas, 6th Floor New York, NY 10010 DATE Tuesday, May 6, 2014 at 10:00 a.m. Eastern Time CORPORATE HEADQUARTERS 675...