WeightWatchers 2008 Annual Report Download - page 41

connection with the early extinguishment of the WW.com Credit Facilities, we recorded a charge of $3.0 million
in the first quarter of 2007 relating to the write-off of the deferred financing costs associated with the WW.com
Credit Facilities.
Franchise Acquisitions
Acquisitions of Palm Beach, Wichita and Syracuse. On January 31, 2008, we acquired substantially all of
the assets of our Palm Beach, Florida franchisee for a purchase price of approximately $12.9 million. On June 13,
2008, we acquired substantially all of the assets of our Wichita, Kansas franchisee for a purchase price of
approximately $5.7 million. On June 19, 2008, we acquired substantially all of the assets of two of our
franchisees, Weight Watchers of Syracuse, Inc. and Dieters of the Southern Tier, Inc. for a combined purchase
price of approximately $20.9 million. These acquisitions were financed through cash from operations. These
acquisitions have been accounted for as purchases and earnings have been included in our consolidated operating
results since their respective dates of acquisition.
Acquisition of British Columbia. On June 3, 2007, we acquired substantially all of the assets of our British
Columbia franchisee for a purchase price of approximately $15.8 million, which was financed through cash from
operations. This acquisition has been accounted for as a purchase and earnings have been included in our
consolidated operating results since the date of acquisition.
Acquisitions of Indiana, Eastern Canada, Suffolk, Western Michigan, Greece and Italy. On July 27, 2006,
we acquired substantially all of the assets of our Indiana franchisee for a purchase price of approximately $25.0
million. On August 17, 2006, we acquired substantially all of the assets of our eastern Canadian franchisee and of
Vale Printing Limited for a net purchase price of approximately $51.2 million. On November 2, 2006, we
acquired substantially all of the assets of our Suffolk County, New York franchisee for a purchase price of
approximately $24.5 million. On December 11, 2006, we acquired substantially all of the assets of our western
Michigan franchisee for a net purchase price of $39.5 million, and reacquired our franchise rights in Greece and
Italy for approximately $4.3 million. These acquisitions were financed through cash from operations. These
acquisitions have been accounted for as purchases and earnings have been included in our consolidated operating
results since their respective dates of acquisition.
Acquisitions of Washington, D.C. and Fort Worth. On May 9, 2004, we acquired substantially all of the
assets of our Washington, D.C. area franchisee for a purchase price of $30.5 million. On August 22, 2004, we
acquired substantially all of the 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.
Reversal of Tax Reserves
During the third quarter of fiscal 2004, we recorded a tax benefit by reversing a $5.5 million accrued but no
longer necessary tax liability resulting from the September 1999 recapitalization and stock repurchase transaction
with Heinz. In the fourth quarters of fiscal 2005 and fiscal 2004, we recorded a tax benefit by reversing a
$0.9 million and $2.8 million state tax reserve, respectively, with respect to accrued but no longer necessary state
tax liabilities. During the fourth quarter of fiscal 2004, WeightWatchers.com received a benefit of $5.5 million
from its deferred tax asset as a result of the utilization of net operating loss carryforwards. Also in the fourth
quarter of fiscal 2004, due to the then recent trend in profitability of WeightWatchers.com, it was concluded that
it was more likely than not that WeightWatchers.com would fully realize the benefit of its deferred tax assets. As
such, WeightWatchers.com reversed all of its remaining valuation allowance, except for $1.5 million relating to
its foreign operations. Also in the fourth quarter of fiscal 2005, due to the recent trend in profitability of certain
of WeightWatchers.com’s foreign operations, it was concluded that it was more likely than not that these foreign
operations would fully realize the benefit of its deferred tax assets. As such, WeightWatchers.com reversed all
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