WeightWatchers 2004 Annual Report Download - page 22

this early extinguishment of debt, we recognized expenses of $1.0 million in the third quarter of fiscal
2004 related to the tender premiums associated with this redemption.
On August 21, 2003, in connection with the purchase of the majority of our Senior Subordinated
Notes, we refinanced our Credit Facility as follows: Term Loans B and D and the TLC in the aggregate
amount of $204.7 million were repaid and replaced with a new Term Loan B in the amount of
$382.9 million and a new TLC in the amount of $49.1 million. Term Loan A in the amount of
$30.0 million remained in place, along with a Revolver with available borrowings up to $45.0 million.
Due to this early extinguishment of debt, we recognized expenses of $47.4 million in the third quarter
of 2003.
On January 21, 2004, we refinanced our Credit Facility as follows: the Term Loan A, Term Loan B
and the TLC in the aggregate amount of $454.2 million were repaid and replaced with a new Term
Loan B in the amount of $150.0 million and borrowings under the Revolver of $310.0 million. In
connection with this refinancing, available borrowings under the Revolver increased from $45.0 million
to $350.0 million. Due to the early extinguishment of the Term Loans resulting from this refinancing,
we recognized expenses of $3.3 million in the first quarter of fiscal 2004.
On October 19, 2004, we increased our net borrowing capacity by adding an Additional Term
Loan B to our existing Credit Facility in the amount of $150.0 million. Coterminous with the previously
existing Credit Facility, these funds were initially used to reduce borrowings under our Revolver,
resulting in no increase in our net borrowing.
Acquisitions of Washington, D.C. and Fort Worth. On May 9, 2004, we acquired certain assets of
our Washington, D.C. area franchisee for a purchase price of $30.5 million. On August 22, 2004, we
acquired certain assets of our Fort Worth franchisee for a purchase price of $30.0 million. These
acquisitions were financed through cash from operations. The acquisitions were accounted for as
purchases and, accordingly, earnings from these franchises have been included in our consolidated
operating results since the respective dates of the acquisitions.
Acquisitions of WW Group and Dallas/New Mexico. On March 30, 2003, we acquired certain assets
of eight of the fifteen franchises of The WW Group, Inc. and its affiliates (the ‘‘WW Group’’) for an
aggregate purchase price of $180.7 million. The acquisition was financed through cash and additional
borrowings of $85 million. On November 30, 2003, we acquired certain assets of our franchises in
Dallas and New Mexico for a total purchase price of $27.2 million. This acquisition was financed
through cash from operations. The acquisition was accounted for as a purchase and, accordingly,
earnings from these franchises have been included in our consolidated operating results since the date
of acquisition.
Acquisitions of North Jersey, San Diego and Eastern North Carolina. On January 18, 2002, we
acquired the franchise territory and certain business assets of our franchise in North Jersey for an
aggregate purchase price of $46.5 million. The acquisition was financed through additional borrowings
that were subsequently repaid by the end of the second quarter of 2002. On July 2, 2002 and
September 1, 2002, we acquired the assets of our franchises in San Diego and eastern North Carolina
for a total purchase price of $11.0 and $10.6 million, respectively. These acquisitions were financed
through cash from operations. The acquisitions were accounted for as purchases and, accordingly,
earnings from these franchises have been included in our consolidated operating results since the
respective dates of the acquisitions.
Reversal of Tax Valuation Allowance. During the fourth quarter of fiscal 2001, we reversed the
remaining tax valuation allowance set up in conjunction with the acquisition by Artal Luxembourg in
1999. At the time of the acquisition, we determined that it was more likely than not that a portion of
the deferred tax asset would not be utilized. Therefore, a valuation allowance of approximately
$72.1 million was established against the corresponding deferred tax asset. Based on our performance
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