WeightWatchers 2009 Annual Report Download - page 43

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 entity. Because we have a direct, controlling financial
interest in the joint venture entity, we began to consolidate this entity in the first quarter of fiscal 2008.
Consolidation/Acquisition of WeightWatchers.com
As of December 16, 2005, WeightWatchers.com became a wholly-owned subsidiary of Weight Watchers
International, Inc. In connection with this acquisition of WeightWatchers.com, we recognized $46.4 million of
expenses during fiscal 2005. See “Item 1. Business—History—WeightWatchers.com Acquisition” in Part I of
this Annual Report on Form 10-K for further details on this acquisition.
Long-Term Debt
On December 16, 2005, WeightWatchers.com borrowed $215.0 million pursuant to two credit facilities, or
the WW.com Credit Facilities, consisting of (i) a five year, senior secured first lien term loan facility in an
aggregate principal amount of $170.0 million and (ii) a five and one-half year, senior secured second lien term
loan facility in an aggregate principal amount of $45.0 million.
On May 8, 2006, we entered into a refinancing to reduce our effective interest rate while increasing our
borrowing capacity and extending the maturities of borrowings under WWI’s then-existing credit facility. In
connection with the refinancing, WWI’s then-existing tranche B facilities in the aggregate amount of $294.4
million were repaid and replaced with a new tranche A facility in the amount of $350.0 million. The additional
funds of $55.6 million were used to pay down WWI’s then-existing revolving line of credit. Also, in connection
with this refinancing, WWI’s then-existing revolving line of credit was replaced with a new revolving line of
credit which increased borrowing capacity from $350.0 million to $500.0 million. In connection with this
refinancing, we incurred expenses of $1.3 million.
On January 26, 2007, in connection with our Tender Offer and share repurchase more fully described under
“Item 1. Business—History—Tender Offer and Share Repurchase” in Part I of this Annual Report on Form
10-K, we increased our borrowing capacity by adding an additional tranche A facility in the amount of $700.0
million and a new tranche B facility in the amount of $500.0 million to WWI’s then-existing credit facility. We
utilized (a) $185.8 million of these proceeds to pay off the WW.com Credit Facilities, (b) $461.6 million to
repurchase approximately 8.5 million of our shares in the Tender Offer and (c) $567.6 million to repurchase
approximately 10.5 million of our shares from Artal. In connection with the early extinguishment of the
WW.com Credit Facilities, we recorded a charge of $3.0 million in the first quarter of 2007 relating to the
write-off of the deferred financing costs associated with the WW.com Credit Facilities.
On June 26, 2009, we amended the WWI Credit Facility (defined hereafter) to allow us to make loan
modification offers to all lenders of any tranche of term loans or revolving loans to extend the maturity date of
such loans and/or reduce or eliminate the scheduled amortization. Any such loan modifications would be
effective only with respect to such tranche of term loans or revolving loans and only with respect to those lenders
that accept our offer. Loan modification offers may be accompanied by increased pricing and/or fees payable to
accepting lenders. This amendment also provides for up to an additional $200.0 million of incremental term loan
financing through the creation of a new tranche of term loans, provided that the aggregate principal amount of
such new term loans cannot exceed the amount then outstanding under our existing revolving credit facility. In
addition, the proceeds from such new tranche of term loans must be used solely to repay certain outstanding
revolving loans and to reduce the commitments of certain revolving lenders. In connection with this amendment,
we incurred fees of approximately $4.1 million during fiscal 2009.
For additional details on the WWI Credit Facility, see “Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Liquidity and Capital Resources—Long-Term Debt” in Part II
of this Annual Report on Form 10-K.
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