WeightWatchers 2009 Annual Report Download - page 101

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
On February 12, 2008, accounting guidance was issued which delayed the application of fair value
measurement rules to fiscal 2009 for all non-financial assets and non-financial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on at least an annual basis. The Company adopted
this guidance beginning December 30, 2007, the first day of fiscal 2008, and began to apply the fair value
measurement rules to goodwill and other intangible assets on the first day of fiscal 2009.
On December 30, 2007, the Company adopted the provisions of new accounting guidance which permits
companies to make an irrevocable election to measure certain financial assets and liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been elected are required to be recorded
in earnings at each subsequent reporting date. Upon adopting this accounting guidance, the Company did not
elect the fair value option under this standard for any of its financial assets or liabilities.
17. Derivative Instruments and Hedging
As of January 2, 2010 and January 3, 2009, the Company had in effect an interest rate swap with a notional
amount of $900,000. In addition, in January 2009, the Company entered into a forward-starting interest rate swap
with an effective date of January 4, 2010 and a termination date of January 27, 2014. During the term of this
forward-starting interest rate swap, the notional amount will fluctuate. The initial notional amount is $425,000
and the highest notional amount will be $755,000.
The Company is hedging forecasted transactions for periods not exceeding the next five years. At January 2,
2010, given the current configuration of its debt, the Company estimates that no derivative gains or losses
reported in accumulated other comprehensive income (loss) will be reclassified to the Statement of Operations
within the next twelve months.
As of January 2, 2010 and January 3, 2009, cumulative losses for qualifying hedges were reported as a
component of accumulated other comprehensive income (loss) in the amounts of $23,735 ($38,910 before taxes)
and $37,326 ($61,193 before taxes), respectively. For the fiscal years ended January 2, 2010, January 3, 2009
and December 29, 2007, there were no fair value adjustments recorded in the statement of operations since all
hedges were considered qualifying and effective.
18. Quarterly Financial Information (Unaudited)
The following is a summary of the unaudited quarterly consolidated results of operations for the fiscal years
ended January 2, 2010 and January 3, 2009.
For the Fiscal Quarters Ended
April 4,
2009
July 4,
2009
October 3,
2009
January 2,
2010
Fiscal year ended January 2, 2010
Revenues, net ......................................... $390,578 $372,526 $324,494 $311,315
Gross profit ........................................... 212,173 207,469 177,995 130,337
Operating income ...................................... 93,845 111,340 101,240 50,225
Net income attributable to the Company .................... 47,306 58,762 52,569 18,707
Basic EPS attributable to the Company ..................... $ 0.61 $ 0.76 $ 0.68 $ 0.24
Diluted EPS attributable to the Company .................... $ 0.61 $ 0.76 $ 0.68 $ 0.24
F-29