WeightWatchers 2004 Annual Report Download - page 79

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
6. Long-Term Debt (Continued)
On April 1, 2003, in connection with the acquisition of certain assets of the WW Group, WWI
borrowed $85,000 under a new Term Loan D pursuant to the Credit Facility, as amended on that date.
This loan was repaid and replaced as part of the August 21, 2003 refinancing, as explained below.
On August 21, 2003, in conjunction with the tender offer (as described below), WWI refinanced its
Credit Facility as follows: Term Loans B and D and the transferable loan certificate (‘‘TLC’’) in the
aggregate amount of $204,674 were repaid and replaced with a new Term Loan B in the amount of
$382,851 and a new TLC in the amount of $49,149. Term Loan A in the amount of $29,956 remained
in place along with a Revolver with available borrowings up to $45,000.
On January 21, 2004, WWI refinanced its Credit Facility as follows: the Term Loan A, Term
Loan B, and the TLC in the aggregate amount of $454,180 were repaid and replaced with a new Term
Loan B in the amount of $150,000 and borrowings under the Revolver of $310,000. In connection with
this refinancing, available borrowings under the Revolver increased from $45,000 to $350,000.
On October 19, 2004, WWI increased its net borrowing capacity by adding an Additional Term
Loan B to its existing Credit Facility in the amount of $150,000. Coterminous with the previously
existing Credit Facility, these funds were initially used to reduce borrowings under WWI’s Revolver,
resulting in no increase in WWI’s net borrowing.
Borrowings under the Credit Facility at January 1, 2005 are paid quarterly and bear interest at a
rate equal to LIBOR plus (a) in the case of the Term Loan B and the Revolver, 1.75% or, at WWI’s
option, the alternative base rate, as defined, plus 0.75% and (b) in the case of the Additional Term
Loan B, 1.50%, or at WWI’s option, the alternative base rate, as defined, plus 0.50%. Borrowings
under the Credit Facility at January 3, 2004 bore interest at a rate equal to LIBOR plus (a) in the case
of Term Loan A and the Revolver, 1.75% or, at WWI’s option, the alternate base rate, as defined, plus
0.75% and, (b) in the case of Term Loan B and the TLC, 2.25% or, at WWI’s option, the alternate
base rate plus 1.25%.
At January 1, 2005, interest rates for the Term Loan B, Additional Term Loan B and Revolver
were 4.16%, 3.77% and 4.03%, respectively. At January 3, 2004, interest rates for the Term Loan A,
Term Loan B and TLC were 2.93%, 3.43% and 3.44%, respectively. In addition to paying interest on
outstanding principal under the Credit Facility, WWI is also required to pay a commitment fee to the
lenders under the Revolver with respect to the unused commitments. This rate was 0.375% and 0.50%
per year for the years ended January 1, 2005 and January 3, 2004, respectively. All assets of WWI
collateralize the Credit Facility.
The Credit Facility contains customary covenants including covenants that in certain circumstances
restrict WWI’s ability to incur additional indebtedness, pay dividends on and redeem capital stock,
make other restricted payments, including investments, sell its assets and enter into consolidations,
mergers and transfers of all or substantially all of its assets. The Credit Facility also requires WWI to
maintain specific financial ratios and satisfy financial condition tests. The Credit Facility contains
customary events of default. Upon the occurrence of an event of default under the Credit Facility, the
lenders may cease making loans and declare amounts outstanding to be immediately due and payable.
F-17