WeightWatchers 2010 Annual Report Download - page 91

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIE
S
NO
TE
S
T
OCO
N
SO
LIDATED FINAN
C
IAL
S
TATEMENT
S
(
IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
)
The fair value of the Company’s interest rate swaps is reported in derivative payable and prepaid expenses
and other current assets on its balance sheet. See Note 1
6
for a further discussion regarding the fair value of the
Company’s interest rate swaps. The net effect of the interest payable and receivable under the Company’s
interest rate swa
p
s is included in interest ex
p
ense on the statement of o
p
erations
.
I
n
v
estments:
T
h
e Company uses t
h
e cost met
h
o
d
to account
f
or
i
nvestments
i
nw
hi
c
hi
t
h
o
ld
s 20% or
l
ess o
f
t
he
i
nvestee’s vot
i
ng stoc
k
an
d
over w
hi
c
hi
t
d
oes not
h
ave s
i
gn
ifi
cant
i
n
fl
uence.
Deferre
d
Financing Costs:
Deferred financin
g
costs consist of fees paid b
y
the Compan
y
as part of the establishment, exchan
g
e and/o
r
modification of the Compan
y
’s lon
g
-term debt. Durin
g
the fiscal
y
ears ended Januar
y
1, 2011 and Januar
y
2,
2010, the Compan
y
incurred deferred financin
g
costs of $11,483 and $4,058, respectivel
y
, associated with the
r
efinancin
g
of the WWI Credit Facilit
y
(as defined in Note 7). Such costs are bein
g
amortized usin
g
the strai
g
ht
-
line method over the term of the related debt. Amortization expense for the fiscal
y
ears ended Januar
y
1,
2011, Januar
y
2, 2010 and Januar
y
3, 2009 was $4,659, $2,097 and $1,440, respectivel
y
.
Com
p
rehensive Income (Loss)
:
Comprehensive income (loss) represents the change in shareholders’ equity (deficit) resulting from
transactions other than shareholder investments and distributions. The Company’s comprehensive income (loss
)
includes net income, changes in the fair value of derivative instruments and the effects of foreign currenc
y
translations. At January 1, 2011 and January 2, 2010, the cumulative balance of changes in fair value of
derivative instruments, net of taxes, is (
$
24,118) and (
$
23,735), respectively. At January 1, 2011 and January 2,
2010, the cumulative balance of the effects of foreign currency translations, net of taxes, is
$
19,601 and
$
16,052,
r
espectively.
R
ec
l
assi
f
ication:
Certa
i
npr
i
or
y
ear amounts
h
ave
b
een rec
l
ass
ifi
e
d
to con
f
orm to t
h
e current
y
ear presentat
i
on.
3. Ac
q
uisitions
The Compan
y
acquired certain franchisees and, accordin
g
l
y
, earnin
g
s have been included in th
e
consolidated operatin
g
results of the Compan
y
since their dates of acquisition. Details of ke
y
franchis
e
ac
q
uisitions are outlined below
.
On Januar
y
31, 2008, t
h
e Compan
y
acqu
i
re
d
su
b
stant
i
a
lly
a
ll
o
f
t
h
e assets o
fi
ts Pa
l
m Beac
h
,F
l
or
id
a
f
ranchisee, Wei
g
ht Watchers of Palm Beach Count
y
, Inc., for a net purchase price of $12,936, plus assumed
liabilities and transaction costs of $319. The total purchase price has been allocated to franchise ri
g
hts acquired
($12,693), inventor
y
($113), fixed assets ($299) and other current assets ($150).
On June 13, 2008, the Company acquired substantially all of the assets of its Wichita, Kansas franchisee
,
W
eight Watchers of Greater Wichita, Inc., for a net purchase price of
$
5,734. The total purchase price has bee
n
allocated to franchise rights acquired (
$
5,676) and prepaid expenses (
$
58)
.
F
-
11