WeightWatchers 2008 Annual Report Download - page 60

On December 18, 2006, we commenced the Tender Offer in which we sought to acquire up to 8.3 million
shares of our common stock at a price between $47.00 and $54.00 per share. Prior to the Tender Offer, we
entered into an agreement with Artal whereby Artal agreed to sell us, at the same price as is determined in the
Tender Offer, the number of its shares of our common stock necessary to keep its percentage ownership in us at
substantially the same level after the Tender Offer. Artal also agreed not to participate in the Tender Offer so that
it would not affect the determination of the price in the Tender Offer. The Tender Offer expired at midnight on
January 18, 2007, and on January 26, 2007 we repurchased approximately 8.5 million shares at a price of $54.00
per share. These repurchased shares were comprised of 8.3 million shares that we offered to purchase and
approximately 0.2 million shares purchased pursuant to our right to purchase up to an additional 2% of the
outstanding shares as of November 30, 2006. On February 2, 2007, we repurchased approximately 10.5 million
of Artal’s shares at a purchase price of $54.00 per share pursuant to our prior agreement with Artal. In January
2007, we amended and supplemented our revolving credit facility to finance these repurchases.
Factors Affecting Future Liquidity
Any future acquisitions, joint ventures or other similar transactions could require additional capital and we
cannot be certain that any additional capital will be available on acceptable terms or at all. Our ability to fund our
capital expenditure requirements, interest, principal and dividend payment obligations and working capital
requirements and to comply with all of the financial covenants under our debt agreements depends on our future
operations, performance and cash flow. These are subject to prevailing economic conditions and to financial,
business and other factors, some of which are beyond our control.
Off-Balance Sheet Transactions
As part of our ongoing business, we do not participate in transactions that generate relationships with
unconsolidated entities or financial partnerships established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes, such as entities often referred to as structured
finance or special purpose entities.
Related Parties
For a discussion of related party transactions affecting us, see “Item 13. Certain Relationships and Related
Transactions, and Director Independence” in Part III of this Annual Report on Form 10-K.
Seasonality
Our business is seasonal, with revenues generally decreasing at year end and during the summer months.
Our advertising schedule supports the three key enrollment-generating seasons of the year: winter, spring and
fall, with winter having the highest concentration of advertising spending. The timing of certain holidays,
particularly Easter, which precedes the spring marketing campaign and occurs between March 22 and April 25,
may affect our results of operations and the year-to-year comparability of our results. For example, in fiscal
2008, Easter fell on March 23, which means that the spring marketing campaign began in the first quarter of
fiscal 2008 as opposed to the second quarter of fiscal 2007. Our operating income for the first half of the year is
generally the strongest. While WeightWatchers.com experiences similar seasonality in terms of new subscriber
signups, its revenue tends to be less seasonal because it amortizes subscription revenue over the related
subscription period.
Recently Issued Accounting Standards
In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about
Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133.” This statement
amends and expands the disclosure requirements related to derivative instruments and hedging activities by
requiring qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures
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