WeightWatchers 2003 Annual Report Download - page 72

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
6. Long-Term Debt (Continued)
Senior Subordinated Notes
In addition, as part of the Transaction, the Company issued $150,000 USD denominated and
A100,000 euro denominated principal amount of 13% Senior Subordinated Notes due 2009 (the
‘‘Notes’’) to qualified institutional buyers.
In fiscal 2003, the Company successfully completed a tender offer and consent solicitation to
purchase 96.6% of its $150,000 USD denominated ($144,900) and 91.6% of its A100,000 euro
denominated (A91,600) 13% Senior Subordinated Notes. The consideration for the tender offer and
consent solicitation was funded from cash from operations of $57,292 and additional borrowings under
the Credit Facility of $227,326 (as described above). In conjunction with the tender offer, the Company
also solicited consents to eliminate substantially all of the restrictive covenants and certain default
provisions in the indentures pursuant to which the Notes were issued. Due to this early extinguishment
of debt, the Company recognized expenses of $47,368 in the fiscal year ended January 3, 2004, which
included tender premiums of $42,619, the write-off of unamortized debt issuance costs of $4,387 and
$362 of fees associated with the transaction.
At January 3, 2004 and December 28, 2002, the euro notes of A8,388 and A100,000, respectively,
translated into $10,564 and $104,380, respectively. The unrealized impact of the change in foreign
exchange rates related to euro denominated debt is reflected in other expense, net. Interest is payable
on the Notes semi-annually on April 1 and October 1 of each year. The Company uses interest rate
swaps and foreign currency forward contracts in association with its debt. As of January 3, 2004, 100%
of the Company’s euro denominated Senior Subordinated Notes are effectively hedged through the use
of a cash flow hedge.
The Company’s obligations under the Notes are subordinated and junior in right of payment to all
existing and future senior indebtedness of the Company, including all indebtedness under the Credit
Facility. The Notes are guaranteed by certain subsidiaries of the Company.
Maturities
At January 3, 2004, the aggregate amounts of existing long-term debt maturing in each of the next
five years and thereafter are as follows (see also Note 19):
2004 ................................................... $15,554
2005 ................................................... 17,426
2006 ................................................... 4,320
2007 ................................................... 4,320
2008 ................................................... 4,320
2009 and thereafter ........................................ 423,934
$469,874
7. Redeemable Preferred Stock
The Company issued one million shares of Series A Preferred Stock to Heinz in conjunction with
the Transaction. On March 1, 2002, the Company redeemed from Heinz all of the Company’s Series A
Preferred Stock for a redemption price of $25,000 plus accrued and unpaid dividends. The redemption
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