WeightWatchers 2002 Annual Report Download - page 63

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
3. Acquisitions (Continued)
$46,500. The acquisition was financed through additional borrowings from the Company’s Revolving
Credit Facility under its Amended and Restated Credit Agreement, as amended on January 16, 2001
and December 21, 2001 (the ‘‘Credit Facility’’). This borrowing was subsequently repaid by the end of
the second quarter 2002. See Note 6.
Acquired assets in total for 2002 of $461 include inventory ($155), property and equipment ($282)
and other assets ($24). The excess of the aggregate purchase price over the assets acquired was
allocated to goodwill.
On September 4, 2001, the Company completed the acquisition of the assets of Weight Watchers
of Oregon, Inc., for an aggregate purchase price of $13,500. Substantially all of the purchase price in
excess of the net assets acquired was recorded as goodwill.
On January 16, 2001, the Company completed the acquisition of the assets of one of its largest
franchised territories, Weighco Enterprises, Inc., Weighco of Northwest, Inc., and Weighco of
Southwest, Inc. (collectively, ‘‘Weighco’’), for an aggregate purchase price of $83,800 plus acquisition
costs of $577. Assets acquired included inventory ($1,884) and property and equipment ($1,801). The
excess of investment over the net book value of assets acquired at the date of acquisition resulted in
goodwill of $80,692. The acquisition was financed through additional borrowings of $60,000 obtained
pursuant to the Company’s Credit Facility, and cash from operations.
The following table presents unaudited pro forma financial information that reflects the
consolidated results of operations of the Company, including Weighco, as if the acquisition had
occurred as of the beginning of the period. This pro forma information does not necessarily reflect the
actual results that would have occurred, nor is it necessarily indicative of future results of operations of
the consolidated companies. The impact of fiscal 2002 acquisitions was not material to the results of
operations, and therefore pro forma information is not included for these acquisitions.
Pro Forma
Eight Months Ended
December 30,
2000
Revenue .......................................... $306,509
Net income ........................................ $ 17,257
Per share information:
Basic and diluted earnings per share .................... $ 0.15
4. Goodwill and Intangible Assets
In accordance with SFAS No. 142, the Company no longer amortizes goodwill. The Company
performed a fair value impairment test as of December 28, 2002 on its goodwill which determined that
no impairment loss was necessary. Unamortized goodwill is due mainly to acquisitions of the
Company’s franchised territories. For the fiscal year ended December 28, 2002, goodwill increased due
to the acquisitions of Weight Watchers of North Jersey, Inc. ($46,309), Weight Watchers of San Diego
and The Inland Empire, Inc. ($10,804), Weight Watchers of Raleigh Durham ($10,575) and due to the
translation of the assets of the Company’s foreign subsidiaries into U.S. Dollars ($2,102).
F-14