WeightWatchers 2002 Annual Report Download - page 79

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
15. Commitments and Contingencies
Legal:
Due to the nature of its activities, the Company is, at times, subject to pending and threatened
legal actions which arise during the normal course of business. In the opinion of management, based in
part upon advice of legal counsel, the disposition of such matters is not expected to have a material
effect on the Company’s results of operations and consolidated financial condition.
Lease Commitments:
Minimum rental commitments under non-cancelable operating leases, primarily for office and
rental facilities at December 28, 2002, consist of the following:
2003 .................................................... $15,723
2004 .................................................... 11,920
2005 .................................................... 8,207
2006 .................................................... 5,140
2007 .................................................... 3,629
2008 and thereafter ......................................... 15,850
Total.................................................. $60,469
Total rent expense charged to operations under these leases 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 was $16,321, $14,818, $8,155 and $12,300, respectively.
Repurchase Agreements:
The Company is a party to a repurchase agreement related to the 10% minority interest in the
classroom operation of Finland. Pursuant to this agreement, the Company may elect or be required to
repurchase the minority shareholders’ interest in this operation. If the Company repurchases the
minority interest within five years of the original sale, the repurchase price is based on the original
sales price times the increase in the consumer price index since the date of the sale. If the Company
repurchases the minority interest after five years from the original sale, the repurchase price is based
on a multiple of the average operating income during the last three years.
Franchise Profit Sharing Fund:
In October 2000, the Company reached an agreement with certain franchisees regarding the
sharing of profits of prior and future retail licensed product sales. The settlement provided for a
payment of approximately $3,836, to be paid out through 2001, and released the Company from any
future obligations to the franchisees under profit sharing arrangements dating back to 1969.
The Company’s franchise agreement with certain other North American franchisees provides for
an annual franchise profit sharing distribution of retail licensed product sales based upon specified
formulas. Profit sharing expense under this arrangement for the fiscal years ended December 28, 2002,
December 29, 2001 and April 29, 2000 was $56, $40 and $400, respectively.
F-30