WeightWatchers 2008 Annual Report Download - page 77

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
On December 11, 2006, the Company acquired substantially all of the assets of its western Michigan
franchisee, Weight Watchers of Western Michigan, Inc., for a net purchase price of $37,262 plus assumed
liabilities and transaction costs of $2,284, and reacquired its franchise rights in Greece and Italy for an aggregate
purchase price of $4,297. The total purchase price for these two acquisitions has been allocated to franchise
rights acquired ($42,612), fixed assets ($784), inventory ($445) and other current assets ($2).
On June 3, 2007, the Company acquired substantially all of the assets of its British Columbia franchisee,
Weight Watchers of British Columbia Inc., for a net purchase price of $15,282, plus assumed liabilities and
transaction costs of $532. The total purchase price has been allocated to franchise rights acquired ($15,718),
inventory ($88), fixed assets ($7) and other current assets ($1).
On January 31, 2008, the Company acquired substantially all of the assets of its Palm Beach, Florida
franchisee, Weight Watchers of Palm Beach County, Inc., for a net purchase price of $12,936, plus assumed
liabilities and transaction costs of $319. The total purchase price has been allocated to franchise rights acquired
($12,693), inventory ($113), fixed assets ($299) and other current assets ($150).
On June 13, 2008, the Company acquired substantially all of the assets of its Wichita, Kansas franchisee,
Weight Watchers of Greater Wichita, Inc., for a net purchase price of $5,734. The total purchase price has been
allocated to franchise rights acquired ($5,676) and prepaid expenses ($58).
On June 19, 2008, the Company acquired substantially all of the assets of two of its franchisees, Weight
Watchers of Syracuse, Inc. and Dieters of the Southern Tier, Inc., for a combined net purchase price of $20,935,
plus assumed liabilities and transaction costs of $164. The total purchase price has been allocated to franchise
rights acquired ($20,948), fixed assets ($36), inventory ($56) and prepaid expenses ($59).
The effects of these franchise acquisitions, individually or in the aggregate, were not material to the
Company’s consolidated financial position, results of operations, or operating cash flows in any of the periods
presented.
4. Joint Venture
On February 5, 2008, Weight Watchers Asia Holdings Ltd. (“Weight Watchers Asia”), a direct wholly-
owned subsidiary of the Company, and Danone Dairy Asia, an indirect wholly-owned subsidiary of Groupe
DANONE S.A., entered into a joint venture agreement to establish a weight management business in the
People’s Republic of China. Pursuant to the terms of the joint venture agreement, Weight Watchers Asia and
Danone Dairy Asia own 51% and 49%, respectively, of the Joint Venture.
Because the Company has a direct controlling financial interest in the Joint Venture, it began to consolidate
this entity in the first quarter of fiscal 2008 under the provisions of Accounting Research Bulletin No. 51,
“Consolidated Financial Statements.”
5. Goodwill and Other Intangible Assets
The Company performed its annual impairment review of goodwill and other indefinite-lived intangible
assets as of January 3, 2009 and December 29, 2007 and determined that no impairment existed. Goodwill is due
mainly to the acquisition of the Company by H.J. Heinz Company (“Heinz”) in 1978 and the acquisition of
WW.com in 2005. For the year ended January 3, 2009, the change in goodwill is due to foreign currency
fluctuations. Franchise rights acquired are due to acquisitions of the Company’s franchised territories. For the
year ended January 3, 2009, franchise rights acquired increased due to the franchise acquisitions described in
Note 3, as well as foreign currency fluctuations.
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