WeightWatchers 2003 Annual Report Download - page 82

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
15. Commitments and Contingencies (Continued)
Lease Commitments:
Minimum rental commitments under non-cancelable operating leases, primarily for office and
rental facilities at January 3, 2004, consist of the following:
2004 .......................................................... $21,460
2005 .......................................................... 16,179
2006 .......................................................... 11,209
2007 .......................................................... 7,062
2008 .......................................................... 4,341
2009 and thereafter ............................................... 17,787
Total ..................................................... $78,038
Total rent expense charged to operations under these leases for the fiscal years ended January 3,
2004, December 28, 2002 and December 29, 2001 was $23,855, $16,321 and $14,818, respectively.
Finland Repurchase Agreement:
The Company is a party to a repurchase agreement related to the 10% minority interest in the
classroom operation of Finland. Pursuant to this agreement, the Company may elect or be required to
repurchase the minority shareholders’ interest in this operation. If the Company repurchases the
minority interest within five years of the original sale, the repurchase price is based on the original
sales price times the increase in the consumer price index since the date of the sale. If the Company
repurchases the minority interest after five years from the original sale, the repurchase price is based
on a multiple of the average operating income during the last three years. In December 2003, the
minority shareholder elected to sell his interest in the Finland operation. The terms of the purchase
agreement will be finalized and payment will be made in 2004. The Company estimates this payment
will be approximately $1,500.
Franchise Profit Sharing Fund:
In October 2000, the Company reached an agreement with certain franchisees regarding the
sharing of profits of prior and future retail licensed product sales. The settlement provided for a
payment of approximately $3,836, to be paid out through 2001, and released the Company from any
future obligations to the franchisees under profit sharing arrangements dating back to 1969.
The Company’s franchise agreement with certain other North American franchisees provides for
an annual franchise profit sharing distribution of retail licensed product sales based upon specified
formulas. Profit sharing expense under this arrangement for the fiscal years ended January 3, 2004,
December 28, 2002 and December 29, 2001 was $37, $56 and $40, respectively.
16. Segment and Geographic Data
The Company is engaged principally in one line of business, weight loss products and services. The
following table presents information about the Company’s sources of revenue and other information by
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