WeightWatchers 2003 Annual Report Download - page 80

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
12. Related Party Transactions (Continued)
Management Agreement:
Simultaneous with the closing of the Company’s acquisition by Artal, the Company entered into a
management agreement with The Invus Group, LLC (‘‘Invus’’), the independent investment advisor to
Artal. Under this agreement, Invus provided the Company with management, consulting and other
services in exchange for an annual fee equal to the greater of $1,000 or one percent of the Company’s
EBITDA (as defined in the indentures relating to the Company’s Senior Subordinated Notes), plus any
related out-of-pocket expenses. This agreement has been terminated effective December 28, 2002.
These management fees, recorded in other expense, net for the fiscal years ended December 28, 2002
and December 29, 2001, were $2,838, and $1,926, respectively.
Heinz:
At the closing of the Transaction, the Company granted to Heinz an exclusive worldwide,
royalty-free license to use the Custodial Trademarks (or any portion covering food and beverage
products) in connection with Heinz licensed products. Heinz will pay the Company an annual fee of
$1,200 for five years in exchange for the Company serving as the custodian of the Custodial
Trademarks.
As of January 3, 2004, December 28, 2002 and December 29, 2001, other accrued liabilities include
$1,965, $3,209 and $2,888, respectively, primarily consisting of food royalties received on behalf of
Heinz.
13. Employee Benefit Plans
Weight Watchers Sponsored Plans:
Effective September 29, 1999, the net assets of the Heinz sponsored employee savings plan were
transferred to the Weight Watchers sponsored plan upon execution of the Transaction. The Company
sponsors the Weight Watchers Savings Plan (the ‘‘Savings Plan’’) for salaried and hourly employees.
The Savings Plan is a defined contribution plan that provides for employer matching contributions up
to 100% of the first 3% of an employee’s eligible compensation. The Savings Plan also permits
employees to contribute between 1% and 13% of eligible compensation on a pre-tax basis. Expense
related to these contributions for the fiscal years ended January 3, 2004, December 28, 2002 and
December 29, 2001 was $1,228, $1,033 and $823, respectively.
The Company sponsors the Weight Watchers Profit Sharing Plan (the ‘‘Profit Sharing Plan’’) for all
full-time salaried employees who are eligible to participate in the Savings Plan (except for certain
senior management personnel). The Profit Sharing Plan provides for a guaranteed monthly employer
contribution on behalf of each participant based on the participant’s age and a percentage of the
participant’s eligible compensation. The Profit Sharing Plan has a supplemental employer contribution
component, based on the Company’s achievement of certain annual performance targets, which are
determined annually by the Company’s Board of Directors. The Company also reserves the right to
make additional discretionary contributions to the Profit Sharing Plan. Expense related to these
contributions for the fiscal years ended January 3, 2004, December 28, 2002 and December 29, 2001
was $1,655, $1,560, and $1,361, respectively.
F-26