WeightWatchers 2004 Annual Report Download - page 36

Download and view the complete annual report

Please find page 36 of the 2004 WeightWatchers annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

by Weight Watchers International as a result of the write-off of its $34.5 million loan to
WeightWatchers.com during the fiscal years 2000 and 2001, net of $14.8 million in subsequent
repayments of that loan received during fiscal years 2003 and 2004. The net receivables/payables impact
of all other intercompany eliminations is combined in the $0.5 million decline in receivables, net.
Of the $619.8 million of liabilities on the consolidated balance sheet, $16.5 million resulted from
the adoption of FIN 46R and are comprised mainly of the addition of WeightWatchers.com’s payables
and accrued liabilities of $9.5 million and deferred revenue of $6.7 million.
Shareholders’ equity increases by $3.5 million for the cumulative impact to equity of adopting
FIN 46R. This includes recording WeightWatchers.com’s retained deficit through the 2004 fiscal year as
well as adjustments to reinstate the remaining principal of the $34.5 million loan formerly written off
by Weight Watchers International and to reverse the resultant tax benefit that had been recorded.
Cash Flow
As noted above, the FIN 46R impact on cash was to add $16.5 million to the year ended
January 1, 2004. In the 2004 fiscal year, cash flows increased $10.8 million from the operations of
WeightWatchers.com, net of intercompany eliminations and investing activities. In addition, in the first
quarter of 2004, as is required by this pronouncement, we recorded a $5.7 million net increase in cash
as a result of the impact of consolidating WeightWatchers.com.
The remainder of this section will address the financial position of Weight Watchers International
on a stand-alone basis, excluding the impact of FIN 46R.
Weight Watchers International (excluding the impact of FIN 46R)
Sources and Uses of Cash
For the year ended January 1, 2005, cash and cash equivalents were $18.7 million, a decrease of
$4.7 million from January 3, 2004. Cash flows provided by operating activities in the twelve months of
2004 were $234.0 million and funds used for investing and financing activities totaled $238.6 million.
Investing activities utilized $58.2 million of cash, which included the acquisitions of our Fort Worth and
Washington D.C. area franchises for $60.5 million. Cash used for financing activities totaled
$180.4 million primarily related to the repurchase of 4.7 million shares of our common stock for
$177.1 million, consistent with our stock repurchase program (see Part II, Item 5).
For the fiscal year ended January 3, 2004, cash and cash equivalents decreased $34.1 million to
$23.4 million. Cash flows provided by operating activities were $233.1 million. Funds used for investing
and financing activities during the fiscal year totaled $271.1 million. Investing activities in the year used
$211.6 million of cash and included $208.8 million paid in connection with the acquisition of the assets
of our WW Group and Dallas/New Mexico franchises. In addition, $5.0 million was invested in capital
expenditures. Cash used for financing activities totaled $59.5 million. We paid $60.3 million in
connection with the tender offer and repurchase of our 13% Senior Subordinated Notes and the
concurrent refinancing of our Credit Facility and repurchased $28.8 million of stock in accordance with
our stock repurchase program that began in October 2003. These were partially offset by net proceeds
of $26.6 million from additional debt borrowings arising at the time of the WW Group acquisition at
the end of March 2003.
For the fiscal year ended December 28, 2002, cash and cash equivalents increased $34.2 million to
$57.5 million and cash flows provided by operating activities were $164.9 million. Funds were used primarily
for investing and financing activities. Cash flows used for investing activities totaled $73.9 million and were
primarily attributable to $68.1 million paid in connection with the acquisition of the assets of our North
Jersey, San Diego and Eastern North Carolina franchises, and capital expenditures of $4.9 million. Net cash
flows used for financing activities were $60.5 million, including debt repayments of $35.3 million on our
28