WeightWatchers 2015 Annual Report Download - page 38

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 commercial provider of
weight management services, operating globally through a network of Company-owned and franchise operations.
With over 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. Weight
Watchers-branded products and services include meetings conducted by us and our franchisees, digital weight
management products provided through our websites, mobile sites and apps, products sold at meetings, licensed
products sold in retail channels and magazine subscriptions and other publications. Our primary sources of
revenue are subscriptions for our monthly commitment plans for Weight Watchers meetings and Online
subscriptions. Our “meetings” business refers to providing access to meetings to our monthly commitment plan
subscribers, “pay-as-you-go” members, Total Access subscribers and other meeting members. “Online” refers to
Weight Watchers Online, Weight Watchers OnlinePlus, Personal Coaching and other digital subscription
products.
We operate in numerous countries around the world, including through our franchise operations. We have
four reportable segments based on an integrated geographical structure as follows: North America, United
Kingdom, Continental Europe (CE) and Other. See the section entitled “Business—Business Organization and
Global Operations” in Item 1 of this Annual Report on Form 10-K for further information on these reportable
segments and the countries in which we operate.
Components of our Results of Operations
Revenues
We derive our revenues principally from:
•Service Revenues. Our “Service Revenues” consist of “Meeting Fees” and “Online Subscription
Revenues”. “Meeting Fees” consist of the fees associated with our monthly commitment plans for
unlimited access to meetings and other payment arrangements for access to meetings, including our
“pay-as-you-go” payment arrangement and fees associated with our Total Access product. “Online
Subscription Revenues” consist of the fees associated with subscriptions for our Online subscription
products, including our Personal Coaching product.
•In-meeting product sales. We sell a range of products that complement our weight management
program, including bars, snacks, cookbooks, food and restaurant guides with SmartPoints values,
Weight Watchers magazines, SmartPoints calculators and fitness kits, and certain third-party products,
such as activity-tracking monitors.
•Licensing, franchise royalties and other. We license the Weight Watchers brand and our other
intellectual property in certain categories of food 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.
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