WeightWatchers 2011 Annual Report Download - page 73

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$10.1 million increase in deferred revenue, offset by increases in inventory of $12.9 million and receivables of
$3.5 million. The higher payables and accrued operating expenses in fiscal 2011 resulted from increases in
marketing expenses and higher accrued performance-based compensation.
In fiscal 2010, payments totaling $29.1 million were made in relation to the accrued liability associated with
the previously mentioned adverse UK VAT ruling, thereby decreasing the working capital deficit in fiscal 2010.
Sources and Uses of Cash
Fiscal 2011
At the end of fiscal 2011, cash and cash equivalents were $47.5 million, a decrease of $6.9 million from the
end of fiscal 2010. Cash flows provided by operating activities increased by $120.4 million in fiscal 2011 to
$401.9 million from $281.5 million in fiscal 2010, largely reflecting the increase in net income of $111.8 million
in fiscal 2011, to $304.3 million from $192.5 million in fiscal 2010.
The $401.9 million of cash flows provided by operating activities in fiscal 2011 exceeded fiscal 2011’s
$304.3 million net income by $97.6 million. The excess of cash over net income arose primarily from differences
between book and cash taxes and other elements of the working capital deficit, as well as from typical non-cash
depreciation and amortization expenses. Net cash used for investing and financing activities combined totaled
$397.2 million in fiscal 2011. Investing activities, consisting primarily of capital spending, utilized $45.2 million.
Capital spending, which totaled $44.8 million in fiscal 2011, has averaged approximately $30.2 million annually
over the last three fiscal years and has consisted primarily of information system and website development
expenditures, leasehold improvements and furniture and equipment for meeting locations. Net cash used for
financing activities totaled $352.0 million and consisted primarily of payments on the revolving credit facility of
$174.0 million and long-term debt repayments of $139.3 million, as well as stock repurchases of $34.9 million
and dividend payments to our shareholders of $51.6 million.
Fiscal 2010
At the end of fiscal 2010, cash and cash equivalents were $40.5 million, a decrease of $5.6 million from the
end of fiscal 2009. Cash flows provided by operating activities increased by $15.9 million in fiscal 2010 to
$281.4 million from $265.5 million in fiscal 2009, largely reflecting the increase in net income of $16.9 million
in fiscal 2010, to $194.2 million from $177.3 million in fiscal 2009.
The $281.4 million of cash flows provided by operating activities in fiscal 2010 exceeded fiscal 2010’s
$194.2 million net income by $87.2 million. The excess of cash over net income arose primarily from differences
between book and cash taxes and other elements of the working capital deficit, as well as from typical non-cash
depreciation and amortization expenses. Net cash used for investing and financing activities combined totaled
$285.5 million in fiscal 2010. Investing activities, consisting primarily of capital spending, utilized $28.6 million.
Capital spending, which totaled $22.2 million in fiscal 2010, has averaged approximately $25.7 million annually
over the last three fiscal years and has consisted primarily of information system and website development
expenditures, leasehold improvements, furniture and equipment for meeting locations. Net cash used for
financing activities totaled $256.9 million and consisted primarily of stock repurchases of $106.6 million and
dividend payments to our shareholders of $53.4 million, as well as long-term debt payments of $87.9 million.
Fiscal 2009
At the end of fiscal 2009, cash and cash equivalents were $46.1 million, a decrease of $1.2 million from the
end of fiscal 2008. Cash flows provided by operating activities were $265.5 million, exceeding fiscal 2009 net
income of $177.3 million by $88.2 million. The excess of cash over net income arose primarily from differences
between book and cash taxes and typical non-cash depreciation and amortization expenses. Net cash used for
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