WeightWatchers 2013 Annual Report Download - page 46

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 derive our revenues principally from:
•Meeting fees. Members pay us fees to attend our weekly meetings.
•Internet revenues. We generate revenue from our Internet subscription products and from the sale of
third-party Internet advertising.
•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, PointsPlus calculators and ActiveLink activity monitors, to members in our meetings.
•Licensing, franchise royalties and other. We license the Weight Watchers brand and our other
intellectual property in certain categories of 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.
Prior to fiscal 2014, we had two reporting segments: Weight Watchers International and
WeightWatchers.com. All sources of revenue, other than Internet revenues, are included in our Weight Watchers
International reporting segment. Over the past several years the mix of our revenues has shifted more toward our
WeightWatchers.com reporting segment and away from our Weight Watchers International reporting segment.
Revenues from our Weight Watchers International reporting segment contributed 69.4% of our total revenues in
fiscal 2013, 72.2% of our total revenues in fiscal 2012, and 77.8% of our total revenues in fiscal 2011. Revenues
from our WeightWatchers.com reporting segment contributed 30.6% of our total revenues in fiscal 2013, 27.8%
of our total revenues in fiscal 2012, and 22.2% of our total revenues in fiscal 2011.
Effective the first day of fiscal 2014 (i.e. December 29, 2013), we realigned our organizational structure to
better leverage our significant assets and align our innovation efforts, which resulted in new reporting segments
(North America, United Kingdom, Continental Europe, and Rest of World) for the purpose of making operational
and resource decisions and assessing financial performance. The segment information presented in this Annual
Report on Form 10-K does not reflect this change as the change was not effected internally until our first quarter
of fiscal 2014. We will begin reporting segment information based on these new segments in our Quarterly
Report on Form 10-Q for the first quarter of fiscal 2014.
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