WeightWatchers 2002 Annual Report Download - page 81

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
17. Financial Instruments (Continued)
the Company’s foreign currency denominated obligations. In addition, the Company enters into interest
rate swaps to hedge a substantial portion of its variable rate debt. As of December 28, 2002,
December 29, 2001, December 30, 2000 and April 29, 2000, the Company held currency and interest
rate swap contracts to purchase certain foreign currencies totaling $92,936, $204,276, $158,090 and
$139,428, respectively. The Company also held separate currency and interest rate swap contracts to sell
foreign currencies of $96,051, $207,730, $163,454 and $138,942, respectively.
As of December 28, 2002 and December 29, 2001, cumulative losses for qualifying hedges were
reported as a component of accumulated other comprehensive loss in the amount of $4,536 ($2,675 net
of taxes) and $6,223 ($3,920 net of taxes), respectively. In addition, the ineffective portion of changes in
fair values of qualifying cash flow hedges were not material. To partially offset unrealized gains or
losses from changes in foreign exchange rates related to Euro denominated debt, the Company expects
reclassification from accumulated other comprehensive loss to net income. For the fiscal year ended
December 28, 2002, the Company reclassed $2,258 ($3,702 before taxes, included within other expense
(income), net) to net income from accumulated other comprehensive loss.
For the fiscal years ended December 28, 2002 and December 29, 2001, fair value adjustments for
non-qualifying hedges resulted in a reduction to net income of $2,082 ($3,528 before taxes, included
within other expense (income), net) and $697 ($1,125 before taxes, included within other expense
(income), net), respectively. In addition, for the fiscal year ended December 28. 2002, the Company
terminated all non-qualifying hedges resulting in an increase to net income of $1,439 ($2,359 before
taxes, included within other expense (income), net).
18. Quarterly Financial Information (Unaudited)
The following is a summary of the unaudited quarterly results of operations for the fiscal years
ended December 28, 2002 and December 29, 2001.
F-32