WeightWatchers 2004 Annual Report Download - page 86

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
10. Stock Plans (Continued)
Due to the adoption of FIN 46R (see Note 1), the fair value of stock options granted by
WeightWatchers.com are included in the pro forma footnote disclosures showing the impact to the
Company’s results had it adopted the fair value provisions of SFAS No. 123 (see Note 2). The fair
value of options granted by WeightWatchers.com during fiscal 2004 were estimated on their date of
grant using the Black-Scholes option pricing model with the following weighted average assumptions:
(a) dividend yield of 0%, (b) volatility of 64%, (c) risk-free interest rate of 3.0%—3.9% and
(d) expected term of 5 years.
11. Income Taxes
Although consolidated for financial reporting purposes under FIN 46R, WWI and
WeightWatchers.com are separate tax paying entities. The following tables summarize the consolidated
provision for U.S. federal, state and foreign taxes on income:
January 1, January 3, December 28,
2005 2004 2002
Current:
U.S federal .......................... $41,043 $40,527 $55,670
State ............................... 5,075 10,740 14,650
Foreign ............................. 26,381 20,344 16,921
$72,499 $71,611 $87,241
Deferred:
U.S federal .......................... $20,705 $15,173 $ 4,565
State ............................... 1,900 1,734 397
Foreign ............................. (582) (230) (396)
$22,023 $16,677 $ 4,566
Total tax provision ....................... $94,522 $88,288 $91,807
The components of the Company’s consolidated income before income taxes and the cumulative
effect of accounting change consist of the following:
January 1, January 3, December 28,
2005 2004 2002
Domestic ............................. $208,553 $170,196 $185,610
Foreign ............................... 80,994 62,033 49,891
$289,547 $232,229 $235,501
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