WeightWatchers 2010 Annual Report Download - page 43

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r
ecorded a charge of approximately
$
36.7 million, of which approximately
$
4.2 million was with respect to fiscal
2009 and approximately
$
32.5 million was with respect to fiscal years 2001 through 2008, to cost of revenues i
n
the fourth quarter of fiscal 2009. See “Item 3. Legal Proceedings—UK Self-Employment Matter” in Part I of this
Annual Re
p
ort on Form 10-K for further details on this matter.
R
estructuring Charge
s
I
n fiscal 2009, we recorded
$
5.5 million of restructuring charges associated with our cost savings initiatives
p
reviously announced in the first quarter of fiscal 2009.
Consolidation/China Joint Ventur
e
I
n February 2008, Weight Watchers Asia Holdings Ltd., or 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 Republi
c
o
f China. Pursuant to the terms of the joint venture agreement, Weight Watchers Asia and Danone Dairy Asi
a
o
wn
5
1% 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.
Long-Term Debt
On May 8, 2006, we entered into a refinancing to reduce our effective interest rate while increasing ou
r
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 additiona
l
f
unds 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 o
f
credit which increased borrowing capacity from
$
350.0 million to
$
500.0 million. In connection with thi
s
r
efinancing, we incurred expenses of
$
1.3 million
.
On January 2
6
, 2007, in connection with our Tender Offer and share repurchase more fully described unde
r
“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 WeightWatchers.com’s then existing two 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 earl
y
extinguishment of the WeightWatchers.com credit facilities, we recorded a charge of
$
3.0 million in the firs
t
quarter of 2007 relating to the write-off of the deferred financing costs associated with the 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 b
e
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 t
o
accepting lenders. This amendment also provides for up to an additional
$
200.0 million of incremental term loa
n
f
inancing through the creation of a new tranche of term loans, provided that the aggregate principal amount o
f
such new term loans cannot exceed the amount then outstanding under our existing revolving credit facility. I
n
addition, the proceeds from such new tranche of term loans must be used solely to repay certain outstanding
r
evolving 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
.
2
7