WeightWatchers 2004 Annual Report Download - page 90

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
12. Related Party Transactions (Continued)
is no longer considered a related party. The term of the agreement ran through December 31, 2004.
Total purchases from Nellson for the fiscal year ended December 28, 2002 were $24,351, which
represented approximately 21% of total inventory purchases for the year.
Management Agreement:
Simultaneous with the closing of WWI’s acquisition by Artal, WWI entered into a management
agreement with The Invus Group, LLC (‘‘Invus’’), the independent investment advisor to Artal. Under
this agreement, Invus provided WWI with management, consulting and other services in exchange for
an annual fee equal to the greater of $1,000 or one percent of WWI’s EBITDA (as defined in the
indentures relating to WWI’s Senior Subordinated Notes), plus any related out-of-pocket expenses. This
agreement has been terminated effective December 28, 2002. These management fees, recorded in
other expense, net for the fiscal year ended December 28, 2002 were $2,838.
Heinz:
At the closing of the Recapitalization, WWI granted to Heinz an exclusive worldwide, royalty-free
license to use the Custodial Trademarks (or any portion covering food and beverage products) in
connection with Heinz licensed products. Heinz paid WWI an annual fee of $1,200 for five years in
exchange for the Company serving as the custodian of the Custodial Trademarks.
As of January 1, 2005 and January 3, 2004, other accrued liabilities include $1,519 and $1,965,
respectively, primarily consisting of food royalties received on behalf of Heinz.
13. Employee Benefit Plans
The Company sponsors the Weight Watchers Savings Plan (the ‘‘Savings Plan’’) for salaried and
hourly employees of WWI. The Savings Plan is a defined contribution plan that provides for employer
matching contributions up to 100% of the first 3% of an employee’s eligible compensation. The Savings
Plan also permits employees to contribute between 1% and 13% of eligible compensation on a pre-tax
basis. Expense related to these contributions for the fiscal years ended January 1, 2005, January 3, 2004
and December 28, 2002 was $1,361, $1,228 and $1,033, respectively.
The Company sponsors the Weight Watchers Profit Sharing Plan (the ‘‘Profit Sharing Plan’’) for all
full-time salaried employees of WWI who are eligible to participate in the Savings Plan (except for
certain senior management personnel). The Profit Sharing Plan provides for a guaranteed monthly
employer contribution on behalf of each participant based on the participant’s age and a percentage of
the participant’s eligible compensation. The Profit Sharing Plan has a supplemental employer
contribution component, based on WWI’s achievement of certain annual performance targets, which
are determined annually by the Board of Directors. The Company also reserves the right to make
additional discretionary contributions to the Profit Sharing Plan. Expense related to these contributions
for the fiscal years ended January 1, 2005, January 3, 2004 and December 28, 2002 was $1,808, $1,655
and $1,560, respectively.
For certain senior management personnel of WWI, the Company sponsors the Weight Watchers
Executive Profit Sharing Plan. Under the Internal Revenue Service (‘‘IRS’’) definition, this plan is
considered a Nonqualified Deferred Compensation Plan. There is a promise of payment by the
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