WeightWatchers 2002 Annual Report Download - page 61

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2. Summary of Significant Accounting Policies (Continued)
The following table illustrates the effect on net income and earnings per share if the Company had
applied the fair value recognition provisions of SFAS No. 123 for the fiscal years ended December 28,
2002 and December 29, 2001, the eight months ended December 30, 2000 and the fiscal year ended
April 29, 2000:
Eight Months
Ended
December 28, December 29, December 30, April 29,
2002 2001 2000 2000
Net income, as reported ..................... $143,694 $147,187 $15,019 $37,759
Deduct:
Total stock-based employee compensation expense
determined under the fair value method for all
stock options awards, net of related tax effect . . 696 558 35 589
Pro forma net income ....................... $142,998 $146,629 $14,984 $37,170
Earnings per share: Basic—as reported .......... $ 1.35 $ 1.34 $ 0.13 $ 0.20
Basic—pro forma ........................ $ 1.35 $ 1.34 $ 0.12 $ 0.20
Diluted—as reported...................... $ 1.31 $ 1.31 $ 0.13 $ 0.20
Diluted—pro forma ...................... $ 1.30 $ 1.31 $ 0.13 $ 0.20
Recently Issued Accounting Standards:
In April 2002, the Financial Accounting Standards Board (‘‘FASB’’) issued SFAS No. 145,
‘‘Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB No. 13 and Technical
Corrections.’’ SFAS No. 145 rescinds SFAS No. 4, which required all gains and losses from the
extinguishment of debt to be classified as an extraordinary item, and amends other existing
authoritative pronouncements to make various technical corrections, clarify meanings, or describe their
applicability under changed conditions. The provisions of SFAS No. 145 are effective for the Company
beginning December 29, 2002. The Company does not expect the adoption of SFAS No. 145 to have a
material impact on its consolidated financial position, results of operations or cash flows.
In June 2002, the FASB issued SFAS No. 146, ‘‘Accounting for Costs Associated with Exit or
Disposal Activities.’’ SFAS No. 146 requires companies to recognize costs associated with exit or
disposal activities when they are incurred rather than at the date of commitment to an exit or disposal
plan. The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after
December 31, 2002. Accordingly, the Company will apply the provisions of SFAS No. 146 prospectively
to exit or disposal activities initiated after December 31, 2002.
In November 2002, the FASB issued Interpretation No. 45, ‘‘Guarantor’s Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.’’
Interpretation No. 45 requires the disclosure of certain guarantees existing at December 28, 2002. In
addition, Interpretation No. 45 requires the recognition of a liability for the fair value of the obligation
of qualifying guarantee activities initiated or modified after December 31, 2002. Accordingly, the
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