WTW » Topics » Overview

These excerpts taken from the WTW 10-K filed Mar 4, 2009.

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 over four 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 2008, consumers spent over $4 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.

The high awareness and credibility of our brand among all types of weight-conscious consumers—women and men, consumers online and offline, the support-inclined and the self-help-inclined—provide us with a significant competitive advantage and growth opportunity. As the number of overweight and obese people worldwide grows, we believe our global presence and brand awareness uniquely position us to capture an increasing share of the global weight management market through our core meetings business and our additional growth vehicles, such as WeightWatchers.com and our licensing efforts.

In the more than 45 years since our founding, we have built our meetings business by helping millions of people around the world lose weight through sensible and sustainable food plans, exercise, behavior modification and group support. Each week, approximately 1.4 million members attend over 50,000 Weight Watchers meetings around the world, which are run by more than 16,000 leaders—each of whom has lost weight on our program. We are constantly improving our scientifically-based weight management approaches, and we are one of only a few commercial weight management programs whose efficacy has been clinically proven. Our strong brand, together with the effectiveness of our plans, loyal customer base and unparalleled network and infrastructure, enable us to attract new and returning members efficiently. Our customer acquisition costs are relatively low due to both word of mouth referrals and our efficient mass marketing programs.

Through WeightWatchers.com, we offer Internet subscription weight management products to consumers and maintain an interactive presence on the Internet for the Weight Watchers brand. We believe WeightWatchers.com is the global leading provider of weight management Internet subscription products. Currently, we provide two Internet subscription offerings: Weight Watchers Online and Weight Watchers eTools. Weight Watchers Online provides interactive and personalized resources that allow users to follow our weight management plans via the Internet. Weight Watchers eTools is the Internet weight management companion for Weight Watchers meetings members who want to interactively manage the day-to-day aspects of their weight management plans on the Internet. We currently offer these two products in the United States, the United Kingdom, Canada, Germany, France, the Netherlands and Australia.

Our licensing revenues have been steadily growing in both the United States and internationally. Companies show continued interest in licensing our brand and other intellectual property as a platform to build their businesses since the Weight Watchers brand brings high credibility and access to the weight-conscious consumer. By partnering with carefully selected companies in categories relevant and helpful to weight-conscious consumers, we have created a highly profitable licensing business as well as a powerful vehicle to reinforce the Weight Watchers brand in the minds of our target consumers.

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 over four 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 2008, consumers spent over $4 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. On a consolidated basis, from fiscal 2004 through fiscal 2008, our revenues and operating income have grown at a compound annual growth rate of 10.6% and 8.6%, respectively.

We currently have two operating segments: Weight Watchers International and WeightWatchers.com. Since April 3, 2004, we have consolidated WeightWatchers.com, initially pursuant to FASB Interpretation No. 46R, “Variable Interest Entities,” or FIN 46R, and beginning with the second quarter of fiscal 2005, pursuant to Accounting Research Bulletin No. 51, “Consolidated Financial Statements”, as a result of increasing our ownership interest in WeightWatchers.com to a controlling interest as of July 2, 2005 and to a 100% interest as of December 16, 2005.

We derive our revenues principally from:

 

   

Meeting fees. Members pay us fees to attend our weekly meetings.

 

   

Product sales. We sell a range of products that complement our weight management plans, such as bars, snacks, cookbooks, POINTS value guides, Weight Watchers magazines and POINTS calculators, primarily to members in our meetings and to our franchisees.

 

   

Internet revenues. We generate revenue from our Internet subscription products and from the sale of 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. In addition, our franchisees typically pay us a royalty fee of 10% of their meeting fee revenues. We also generate revenues from our magazines and third-party advertising in our publications.

Other than Internet revenues, all of the foregoing sources of revenue are included in our Weight Watchers International operating segment. Revenues from our Weight Watchers International operating segment, including revenues from meetings and product sales, comprised 87.7% of our total revenues in fiscal 2008, 89.5% of our total revenues in fiscal 2007 and 89.4% of our total revenues in fiscal 2006. Revenues from our WeightWatchers.com operating segment contributed 12.3% of our total revenues in fiscal 2008, 10.5% of our total revenues in fiscal 2007 and 10.6% of our total revenues in fiscal 2006.

 

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Table of Contents

The following table sets forth our revenues by category for the past five fiscal years.

This excerpt taken from the WTW 10-K filed Feb 27, 2008.

Overview

We are a leading global branded consumer company and the leading global provider of weight management services, with a presence in over 25 countries around the world. With over four 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 2007, consumers spent over $4 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. On a consolidated basis, from fiscal 2003 through fiscal 2007, our revenues and operating income have grown at a compound annual growth rate of 11.7% and 8.3%, respectively.

We currently have two operating segments: Weight Watchers International and WeightWatchers.com. Since April 3, 2004, we have consolidated WeightWatchers.com, initially pursuant to FASB Interpretation No. 46R, “Variable Interest Entities,” or, FIN 46R and beginning with the second quarter of fiscal 2005, pursuant to Accounting Research Bulletin No. 51, “Consolidated Financial Statements”, as a result of increasing our ownership interest in WeightWatchers.com to a controlling interest as of July 2, 2005 and to a 100% interest as of December 16, 2005.

We derive our revenues principally from:

 

   

Meeting fees. Members pay us fees to attend our weekly meetings.

 

   

Product sales. We sell proprietary products that complement our weight management plans, such as bars, snacks, cookbooks, POINTS value guides, Weight Watchers magazines and POINTS calculators, primarily to members in our meetings and to our franchisees.

 

   

Internet revenues. We generate revenue from our Internet subscription products and from the sale of Internet advertising.

 

   

Licensing, franchise royalties and other. We license the Weight Watchers brand and other intellectual property for certain foods and other products. In addition, our franchisees typically pay us a royalty fee of 10% of their meeting fee revenues. We also generate revenues from our magazines and third-party advertising in our publications.

Other than Internet revenues, all of the foregoing sources of revenue are included in our Weight Watchers International operating segment.

 

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Table of Contents

The following table sets forth our revenues by category for the past five fiscal years.

This excerpt taken from the WTW 10-K filed Feb 28, 2007.

Overview

We are a leading global branded consumer company and the leading global provider of weight management services, with a presence in 28 countries around the world. With over four 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 2006, consumers spent over $3.0 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. On a consolidated basis, from fiscal 2002 through fiscal 2006, our revenues and operating income have grown at a compound annual growth rate of 11.1% and 6.4%, respectively.

We currently have two operating segments: Weight Watchers International and WeightWatchers.com. Since April 3, 2004, we have consolidated WeightWatchers.com, initially pursuant to FASB Interpretation No. 46R, “Variable Interest Entities,” or, FIN 46R and beginning with the second quarter of fiscal 2005, pursuant to Accounting Research Bulletin No. 51, “Consolidated Financial Statements”, as a result of increasing our ownership interest in WeightWatchers.com to a controlling interest as of July 2, 2005 and to a 100% interest as of December 16, 2005.

We derive our revenues principally from:

 

   

Meeting fees. Members pay us fees to attend our weekly meetings.

 

   

Product sales. We sell proprietary products that complement our weight management plans, such as bars, snacks, cookbooks, POINTS value guides, Weight Watchers magazines and POINTS calculators, primarily to members in our meetings and to our franchisees.

 

   

Online revenues. We generate revenue from our Internet subscription products and from the sale of Internet advertising.

 

   

Licensing, franchise royalties and other. We license the Weight Watchers brand and other intellectual property for certain foods and other products. In addition, our franchisees typically pay us a royalty fee of 10% of their meeting fee revenues. We also generate revenues from our magazines and third-party advertising in our publications.

Other than online revenues, all of the foregoing sources of revenue are included in our Weight Watchers International operating segment.

 

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The following table sets forth our revenues by category for the past five fiscal years.

This excerpt taken from the WTW 10-K filed Feb 27, 2006.

Overview

        We are a leading global branded consumer company and the leading global provider of weight management services, with a presence in 30 countries around the world. With over four 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 2005, consumers spent over $3.0 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.

        The high awareness and credibility of our brand among all types of weight-conscious consumers—women and men, consumers online and offline, the support-inclined and the self-help inclined—provide us with a significant competitive advantage and growth opportunity. As the number of overweight and obese people worldwide grows, we believe our global presence and brand awareness uniquely position us to capture an increasing share of the global weight management market through our core meeting business and our additional growth vehicles, such as WeightWatchers.com and our licensing efforts.

        In the more than 40 years since our founding, we have built our meeting business by helping millions of people around the world lose weight through a sensible and sustainable diet, exercise, behavior modification and group support. Each week, approximately 1.5 million members attend approximately 48,000 Weight Watchers meetings around the world, which are run by more than 15,000 leaders—each of whom has lost weight on our programs. We are constantly improving our scientifically based weight management approaches, and we are the only commercial weight management program whose efficacy has been clinically proven. Our strong brand, together with the effectiveness of our programs, loyal customer base and unparalleled network and infrastructure, enable us to attract new and returning members efficiently. Our customer acquisition costs remain relatively low due to both word of mouth referrals and our efficient mass marketing programs.

        Through WeightWatchers.com, we offer Internet subscription weight management products to consumers and maintain an interactive presence on the Internet for the Weight Watchers brand. We believe WeightWatchers.com is the leader in weight management Internet subscription products and has twice the market share of its next largest Internet competitor. Currently, we provide two subscription offerings: Weight Watchers Online and Weight Watchers eTools. Weight Watchers Online provides interactive and personalized resources that allow users to follow our weight management plans via the Internet. Weight Watchers eTools is the Internet weight management companion for Weight Watchers meetings members who want to interactively manage the day-to-day aspects of their weight management plans on the Internet. We currently offer these two products in the United States, the United Kingdom, Canada, Germany and Australia/New Zealand.

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        Our licensing revenues have been rapidly growing in both the United States and internationally. Companies are showing an increased interest in licensing our brand and other intellectual property as a platform to build their businesses since the Weight Watchers brand brings high credibility and access to the weight conscious consumer. By partnering with carefully selected companies in categories relevant and helpful to weight conscious consumers, we have created a highly profitable business as well as a powerful vehicle to reinforce the Weight Watchers brand in the minds of our target consumers.

This excerpt taken from the WTW 10-K filed Mar 17, 2005.

Overview

        We are a leading provider of weight-loss services, operating in 30 countries around the world. We conduct our business through a combination of company-owned and franchise operations, with company-owned operations accounting for 78% of total worldwide attendance for the fiscal year ended January 1, 2005. 59% of our revenues were generated by our U.S. operations, and the remaining 41% of our revenues resulted from our international operations. We derive our revenues principally from:

    Meeting fees. Our members pay us a weekly fee to attend our classes.

    Product sales. We sell proprietary products that complement our program, such as snack bars, books, CD-ROMs and POINTS calculators, to our members and franchisees.

    Franchise royalties. Our franchisees typically pay us a royalty fee of 10% of their meeting fee revenues.

    Online subscription fees. WeightWatchers.com generates revenue from monthly subscriptions to its web site.

    Other. We license our brand for certain foods, books and other products. We also generate revenues from the publishing of books and magazines and third-party advertising.

        The following table sets forth our revenues by category for the 2004, 2003, 2002 and 2001 fiscal years, the eight months ended December 30, 2000 and the 2000 fiscal year.


Revenue Sources

 
  Fiscal Years Ended
  Eight Months
Ended

  Fiscal Year
Ended

 
  January 1,
2005

  January 3,
2004

  December 28,
2002

  December 29,
2001

  December 30,
2000

  April 29,
2000

NACO meetings fees   $ 373.1   $ 392.4   $ 350.7   $ 262.5   $ 96.8   $ 130.8
International company-owned meeting fees     256.0     214.8     170.0     153.2     87.3     152.7
Product sales     274.6     276.8     237.6     170.4     66.4     84.2
Franchise royalties     18.8     24.9     31.3     28.3     17.7     25.8
Online subscription fees     65.0                    
Other     37.4     35.0     20.0     9.5     5.0     6.0
   
 
 
 
 
 
Total   $ 1,024.9   $ 943.9   $ 809.6   $ 623.9   $ 273.2   $ 399.5
   
 
 
 
 
 

        After our acquisition by Artal Luxembourg in 1999, we reorganized our management and strengthened our strategic focus. Since April 2000, our revenues have increased at a compound annual growth rate of 22.3% as shown in the chart above. Our operating income margin has grown from 21.9% for the year ended April 29, 2000 to 29.8% in fiscal 2004 (on a stand-alone basis excluding WeightWatchers.com, WWI's operating income margin was 30.0%). The increases are principally a result of:

    Increased NACO classroom attendance. As a result of our decision to re-focus our meetings exclusively on our group education approach and to introduce into NACO our POINTS-based program developed in the United Kingdom and to opportunistically acquire our franchises, our NACO classroom attendance, including the impact of our acquisitions, grew between April 2000 and fiscal 2004 at a compound annual rate of 21.1%. Including acquisitions of our franchises that were made over this period (WW Group and Weighco and those in Fort Worth,

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      Washington, D.C., Dallas, New Mexico, North Jersey, San Diego and Eastern North Carolina), our attendance grew from 13.3 million in April 2000 to 32.3 million in 2004.

    Accelerated growth in Continental Europe. In Continental Europe, we have accelerated growth by adapting our business model to local conditions, implementing more aggressive marketing programs tailored to the local markets and increasing the number of meetings ahead of anticipated demand. Between April 2000 and fiscal 2004, attendance in our Continental European operations grew at a compound annual rate of 13.9%.

    Increased product sales. We have increased our product sales by 226% from April 2000 to fiscal 2004 as a result of our growing attendance and introducing new products. In our meetings, we have increased average product sales per attendance from $2.03 to $3.69 over the same period.

        As shown in the chart below, our worldwide attendance (including acquisitions of franchises) in our company-owned operations has grown by 80%, from 33.3 million in the year ended April 29, 2000 to 59.9 million in fiscal 2004.

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