WeightWatchers 2008 Annual Report Download - page 87

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Pursuant to the Savings Plan, the Company also sponsors a profit sharing plan (the “Profit Sharing Plan”)
for all full-time salaried U.S. employees who are eligible to participate in the Savings Plan (except for certain
senior management personnel). The Profit Sharing Plan provides for a guaranteed monthly employer contribution
on behalf of each participant based on the participant’s age and a percentage of the participant’s eligible
compensation. The Profit Sharing Plan has a discretionary supplemental employer contribution component that is
determined annually by the Compensation and Benefits Committee of the Company’s Board of Directors.
Expense related to these contributions for the fiscal years ended January 3, 2009, December 29, 2007 and
December 30, 2006 was $3,867, $2,941 and $2,393, respectively.
For certain U.S. senior management personnel, the Company sponsors the Amended and Restated Weight
Watchers Executive Profit Sharing Plan (“EPSP”). Under the IRS definition, the EPSP is considered a
Nonqualified Deferred Compensation Plan. There is a promise of payment by the Company made on the
employees’ behalf instead of an individual account with a cash balance. The EPSP provides for a guaranteed
employer contribution on behalf of each participant based on the participant’s age and a percentage of the
participant’s eligible compensation. The EPSP has a discretionary supplemental employer contribution
component that is determined by the Compensation and Benefits Committee of the Company’s Board of
Directors. The account is valued at the end of each fiscal month, based on an annualized interest rate of prime
plus 2%, with an annualized cap of 15%. Expense related to this commitment for the fiscal years ended
January 3, 2009, December 29, 2007 and December 30, 2006 was $1,026, $1,868 and $2,002, respectively.
13. Cash Flow Information
January 3,
2009
December 29,
2007
December 30,
2006
Net cash paid during the year for:
Interest expense .......................................... $ 96,556 $93,595 $44,317
Income taxes ............................................ $132,648 $89,536 $91,886
Noncash investing and
financing activities were as follows:
Fair value of net assets/(liabilities) acquired in
connection with acquisitions .............................. $ 345 $ (326) $ 3,741
Dividends declared but not yet paid at year-end ..................... $ 13,876 $14,233 $17,062
14. Commitments and Contingencies
U.K. VAT Matter
In July 2006, the Company filed an amended notice of appeal with the U.K. VAT and Duties Tribunal, or
VAT Tribunal, appealing a ruling by Her Majesty’s Revenue and Customs, or HMRC, that from April 1, 2005
Weight Watchers meeting fees in the United Kingdom should be fully subject to 17.5% standard rated value
added tax, or VAT. For over a decade prior to April 1, 2005, HMRC had determined that Weight Watchers
meeting fees in the United Kingdom were only partially subject to 17.5% VAT. In March 2007, the VAT
Tribunal ruled that Weight Watchers meetings in the United Kingdom should only be partially subject to 17.5%
VAT. The VAT Tribunal’s ruling was appealed by HMRC to the High Court of Justice Chancery Division, or the
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