WeightWatchers 2003 Annual Report Download - page 68

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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)
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.
Pro Forma
For the fiscal year ended
January 3, December 28,
2004 2002
Revenue ................................................... $963,644 $885,510
Net income ................................................. $145,200 $147,767
Diluted earnings per share ...................................... $ 1.32 $ 1.35
During 2003, the Company also completed the acquisition of franchises in Mexico and Hong Kong,
as well as a third party entity, Easy Slim, for a total purchase price of $1,271, which was paid with cash
from operations. As a result of these three acquisitions, the Company recorded goodwill of $395 and
franchise rights acquired of $1,326. Pro forma results of operations, assuming these acquisitions had
been completed at the beginning of fiscal 2002 would not differ materially from the reported results.
On September 1, 2002, the Company completed the acquisition of the assets of one of its
franchisees, AZIS Properties of Raleigh Durham, Inc. (d/b/a Weight Watchers of Raleigh Durham),
pursuant to the terms of an Asset Purchase Agreement among Weight Watchers of Raleigh Durham,
the Company and Weight Watchers North America, Inc., a wholly owned subsidiary of the Company.
Substantially all the purchase price has been allocated to franchise rights acquired. The purchase price
for the acquisition was $10,600 and was financed through cash from operations.
On July 2, 2002, the Company completed the acquisition of the assets of one of its franchisees,
Weight Watchers of San Diego and The Inland Empire, Inc., pursuant to the terms of an Asset
Purchase Agreement among Weight Watchers of San Diego, the Company and Weight Watchers North
America, Inc. Substantially all of the purchase price has been allocated to franchise rights acquired.
The purchase price for the acquisition was $11,000 and was financed through cash from operations.
On January 18, 2002, the Company completed the acquisition of the assets of one of its
franchisees, Weight Watchers of North Jersey, Inc., pursuant to the terms of an Asset Purchase
Agreement executed on December 31, 2001 among Weight Watchers of North Jersey, Inc., the
Company and Weight Watchers North America, Inc. Substantially all of the purchase price has been
allocated to franchise rights acquired. The purchase price for the acquisition was $46,500. The
acquisition was financed through additional borrowings from the Company’s Credit Facility (as defined
in Note 6). 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).
4. Goodwill and Other Intangible Assets
In accordance with SFAS No. 142, the Company no longer amortizes goodwill or other indefinite
lived intangible assets. The Company performed fair value impairment testing as of January 3, 2004 and
December 28, 2002 on its goodwill and other indefinite-lived intangible assets, which determined that
no impairment was evident. Unamortized goodwill is due mainly to the acquisition of the Company by
F-14