WeightWatchers 2003 Annual Report Download - page 52

Download and view the complete annual report

Please find page 52 of the 2003 WeightWatchers annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

We are required to pay for all expenses incurred by WeightWatchers.com directly attributable to
the services it performs under this agreement, plus a fee of 10% of those expenses. In fiscal 2003 and
2002, service fees incurred by us to WeightWatchers.com were $2.0 million and $1.9 million,
respectively.
WeightWatchers.com Shareholders’ Agreement
We entered into a shareholders’ agreement with WeightWatchers.com, Inc., Artal Luxembourg and
Heinz that governs our and Artal Luxembourg’s relationship with WeightWatchers.com as holders of
our common stock. Heinz has sold all of its shares in WeightWatchers.com back to
WeightWatchers.com and thus no longer has any rights under this agreement. Subsequent transferees of
ours and of Artal Luxembourg must, except for some limited exceptions, agree to be bound by the
terms and provisions of the agreement.
The shareholders’ agreement imposes on us restrictions on the transfer of common stock of
WeightWatchers.com until the earlier to occur of (1) September 29, 2004 and (2) WeightWatchers.com’s
initial public offering of common stock under the Securities Act, except for certain exceptions. We have
the right to participate pro rata in certain transfers of common stock of WeightWatchers.com by Artal
Luxembourg, and Artal Luxembourg has the right to require us to participate on a pro rata basis in
certain transfers of WeightWatchers.com’s common stock by it.
WeightWatchers.com Registration Rights Agreement
We have entered into a registration rights agreement with WeightWatchers.com, Artal Luxembourg
and Heinz with respect to our shares in WeightWatchers.com. Heinz has resold all of its shares in
WeightWatchers.com back to WeightWatchers.com and thus no longer has any rights under this
agreement. The registration rights agreement grants Artal Luxembourg the right to require
WeightWatchers.com to register its shares of WeightWatchers.com common stock upon demand and
also grants us and Artal Luxembourg rights to register and sell shares of WeightWatchers.com’s
common stock in the event WeightWatchers.com conducts certain types of registered offerings.
Nellson Co-Pack Agreement
We entered into an agreement with Nellson Nutraceutical, a former subsidiary of Artal
Luxembourg, to purchase snack bar and powder products manufactured by Nellson Nutraceutical for
sale at our meetings. On October 4, 2002, Nellson Nutraceutical was sold by Artal Luxembourg and at
such time, Nellson Nutraceutical was no longer considered a related party. Under the agreement,
Nellson Nutraceutical agreed to produce sufficient snack bar products to fill our purchase orders within
30 days of Nellson Nutraceutical’s receipt of these purchase orders, and we are not bound to purchase
a minimum quantity of snack bar products. We purchased $24.4 million, and $18.7 million, respectively,
of products from Nellson Nutraceutical during the fiscal years ended December 28, 2002 and
December 29, 2001, respectively. The term of the agreement runs through December 31, 2004, and we
have the option to renew the agreement for successive one-year periods by providing written notice to
Nellson Nutraceutical.
46