WeightWatchers 2008 Annual Report Download - page 86

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The Company’s undistributed earnings of foreign subsidiaries are not considered to be reinvested
permanently. Accordingly, the Company has recorded all taxes, after taking into account foreign tax credits, on
the undistributed earnings of foreign subsidiaries.
During the fourth quarter of fiscal 2006, the Company recorded a tax benefit of approximately $6,300 by
reversing tax reserves which due to the resolution of certain tax matters were no longer necessary, partially offset
by adjustments to its tax valuation allowance for foreign tax net operating loss carryforwards.
The Company adopted the provisions of FIN 48 on December 31, 2006, the first day of its 2007 fiscal year.
As a result of the adoption of this standard, the Company recognized a $1,907 increase in the liability for
unrecognized tax benefits, which was accounted for as a reduction to the opening balance of retained earnings for
fiscal 2007. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
January 3,
2009
December 29,
2007
Balance at beginning of year ..................................... $ 9,455 $8,232
Additions based on tax positions related to the current year ............. 2,169 2,319
Additions based on tax positions of prior years ....................... 493 248
Reductions for tax positions of prior years .......................... (361) (801)
Settlements ................................................... (670) (543)
Balance at end of year .......................................... $11,086 $9,455
At January 3, 2009, the total amount of unrecognized tax benefits that, if recognized, would affect our
effective tax rate is $4,494. As of January 3, 2009, given the nature of the Company’s uncertain tax positions, it
is reasonably possible that there will not be a significant change in the Company’s uncertain tax benefits within
the next twelve months.
The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense.
The Company had $1,655 and $1,224 of accrued interest and penalties at January 3, 2009 and December 29,
2007, respectively. The Company recognized $431 and $516 in interest and penalties during the fiscal years
ended January 3, 2009 and December 29, 2007, respectively.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various
state and foreign jurisdictions. At January 3, 2009, with few exceptions, the Company was no longer subject to
U.S. federal, state or local income tax examinations by tax authorities for years prior to 2004, or non-U.S. income
tax examinations by tax authorities for years prior to 2002.
12. Employee Benefit Plans
The Company sponsors the Amended and Restated Weight Watchers Savings Plan (the “Savings Plan”) for
salaried and hourly U.S. employees of the Company. 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. Expense related to these contributions for the fiscal years ended January 3, 2009, December 29,
2007 and December 30, 2006 was $1,763, $2,451, and $2,239, respectively.
During fiscal 2002, the Company received a favorable determination letter from the IRS that qualifies the
Savings Plan under Section 401(a) of the Internal Revenue Code.
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