Nutrisystem 2011 Annual Report Download - page 3

Dear Fellow Stockholders,
Early last year when we announced our 2010 full year results and guidance for 2011, we let stockholders know that we were
expecting reduced revenues and net income, largely due to intense competitive and continued economic pressures.
In the face of these pressures, the entire Nutrisystem team pulled together quickly to adjust course in mid-stride to protect
shareholder value and preserve profitability. Within days, we executed a number of cost-reduction actions that eliminated over $12 million
of annual general and administrative expenses. Likewise, we changed our promotional strategy in the midst of the January diet season to
improve consumer response and conversion. We optimized our marketing spend to enhance customer response and conversion. And we
immediately launched a host of strategic initiatives geared toward re-energizing revenue growth in future years.
Our #1 goal in the year was to remain profitable despite the expected decrease in revenues, and in 2011 we delivered net income of
$12.3 million, or $0.43 per diluted share, on revenues of $401.3 million. But an equally important goal was to reinvest in new products,
new sales channels, new celebrity spokespersons, and new advertising and public relations strategies to return us to growth in 2012.
Some key initiatives included:
• Developing the new Nutrisystem SUCCESS™ program which features our Chef’s Table™ frozen line which we launched in
December for the beginning of the 2012 diet season;
• Introducing two new brand ambassadors, Janet Jackson and Terry Bradshaw, who created a tremendous amount of buzz and
initial response so far in early 2012; and
• Researching and developing a Nutrisystem-branded product to be able to launch into select grocery store diet aisles in
mid-2012. As a result of this groundwork we’re now prepared to introduce our new retail line of healthy snacks and meal
replacement shakes and bars on the shelves of one of the nation’s largest grocery store chains later this year.
We are in a very different place than we were one year ago. We are expecting to return to a growth trajectory this year. There is a
great deal of excitement about the launch of Nutrisystem SUCCESS, and we are reaching an entirely new potential customer base. Our
new line of Chef’s Table Steamers are getting great reviews all throughout the diet industry for freshness, quality ingredients, and overall
great taste. And as of this writing we are just weeks away from the launch of Nutrisystem in retail diet aisles.
We remain committed to returning value to our stockholders. In 2011, we distributed over $19.3 million to stockholders through
quarterly dividends and announced that our Board of Directors had authorized the repurchase of up to $150.0 million of our outstanding
shares of common stock. We will continue to evaluate these and other means to return cash to stockholders in future quarters.
Obesity remains front-and-center in the public consciousness: the Centers for Disease Control and Prevention estimates that about
one-third of U.S. adults are suffering from obesity. This is corroborated by research from the private sector: According to Nielsen’s
Healthy Eating Trends Around the World January 2012 Study, “More than 63% of Americans currently consider themselves overweight”.
Consumers are looking for diet solutions that meet their needs and taste great, and we believe Nutrisystem holds the answers with our
core-directed weight loss program and soon-to-be-launched retail products. We strongly believe in our mission to support our customers,
and to assist them in achieving success on their weight loss journey and improving the quality of their lives through education, support
and empowerment.
We are excited about what we expect to accomplish in 2012 and beyond. I thank our employees, management team, board of
directors, and stockholders for their continued support and commitment.
Sincerely,
Joseph M. Redling
President and Chief Executive Officer