WeightWatchers 2008 Annual Report Download - page 58

agreements as a result of our achievement of certain financial ratios. The Term Loan B bears interest at an initial
rate equal to LIBOR plus 1.5% per annum or, at our option, the alternate base rate (as defined in the WWI Credit
Facility agreements). In addition to paying interest on outstanding principal under the WWI Credit Facility, we
are required to pay a commitment fee to the lenders under the Revolver with respect to the unused commitments
at an initial rate equal to 0.25% per annum. During the first quarter of fiscal 2008, this commitment fee was
reduced to 0.20% per annum in accordance with the terms of the WWI Credit Facility agreements as a result of
our achievement of certain financial ratios.
The WWI Credit Facility contains customary covenants, including covenants that, in certain circumstances,
restrict our ability to incur additional indebtedness, pay dividends on and redeem capital stock, make other
payments, including investments, sell our assets and enter into consolidations, mergers and transfers of all or
substantially all of our assets. The WWI Credit Facility also requires us to maintain specified financial ratios and
satisfy certain financial condition tests. At January 3, 2009, we were in compliance with all of the required
financial ratios and also met all of the financial condition tests and we expect to continue to do so for the
foreseeable future. The WWI Credit Facility contains customary events of default. Upon the occurrence of an
event of default under the WWI Credit Facility, the lenders thereunder may cease making loans and declare
amounts outstanding to be immediately due and payable. The WWI Credit Facility is guaranteed by certain of
our existing and future subsidiaries. Substantially all of our assets collateralize the WWI Credit Facility.
On March 20, 2008, Standard & Poor’s affirmed its “BB+” rating on the WWI Credit Facility. On
March 31, 2008, Moody’s affirmed its “Ba1” rating for the WWI Credit Facility.
Dividends
We have issued a quarterly cash dividend of $0.175 per share of our common stock every quarter beginning
with the first quarter of fiscal 2006. Prior to these dividends, we have not declared or paid any cash dividends on
our common stock since our acquisition by Artal in 1999.
Any decision to declare and pay dividends in the future will be made at the discretion of our Board of
Directors, after taking into account our financial results, capital requirements and other factors it may deem
relevant. Our Board of Directors may decide at any time to increase or decrease the amount of dividends or
discontinue the payment of dividends based on these factors. The WWI Credit Facility also contains restrictions
on our ability to pay dividends on our common stock.
The WWI Credit Facility provides that we are permitted to pay dividends and extraordinary dividends so
long as we are not in default under the WWI Credit Facility agreements. However, payment of extraordinary
dividends shall not exceed $150.0 million in any fiscal year if net debt to EBITDA (as defined in the WWI Credit
Facility agreements) is greater than 3.75:1 and investment grade rating date (as defined in the WWI Credit
Facility agreements) has not occurred. We do not expect this restriction to impair our ability to pay dividends, but
it could do so.
Contractual Obligations
We are obligated under non-cancelable operating leases primarily for office and rent facilities. Consolidated
rent expense charged to operations under all our leases for fiscal 2008 was approximately $33.8 million.
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