WeightWatchers 2011 Annual Report Download - page 95

Download and view the complete annual report

Please find page 95 of the 2011 WeightWatchers annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Investments:
The Company uses the cost method to account for investments in which it holds 20% or less of the
investee’s voting stock and over which it does not have significant influence.
Deferred Financing Costs:
Deferred financing costs consist of fees paid by the Company as part of the establishment, exchange and/or
modification of the Company’s long-term debt. During the fiscal year ended January 1, 2011, the Company
incurred deferred financing costs of $11,483 associated with the refinancing of the WWI Credit Facility (as
defined in Note 6). Such costs are being amortized using the straight-line method over the term of the related
debt. Amortization expense for the fiscal years ended December 31, 2011, January 1, 2011 and January 2, 2010
was $4,825, $4,659 and $2,097, respectively.
Comprehensive Income:
Comprehensive income represents the change in shareholders’ deficit resulting from transactions other than
shareholder investments and distributions. The Company’s comprehensive income includes net income, changes
in the fair value of derivative instruments and the effects of foreign currency translations. At December 31, 2011
and January 1, 2011, the cumulative balance of changes in fair value of derivative instruments, net of taxes, was
$(13,322) and $(24,118), respectively. At December 31, 2011 and January 1, 2011, the cumulative balance of the
effects of foreign currency translations, net of taxes, was $18,923 and $19,601, respectively.
Reclassification:
Certain prior year amounts have been reclassified to conform to the current year presentation.
3. Acquisitions of Franchisees and Minority Equity Interest in China Joint Venture
Acquisitions of Franchisees
The acquisitions of franchisees have been accounted for under the purchase method of accounting and,
accordingly, earnings have been included in the consolidated operating results of the Company since their dates
of acquisition. There have been no key franchise acquisitions during fiscal 2011, 2010 or 2009.
Acquisition of Minority Equity Interest in China Joint Venture
On February 5, 2008, Weight Watchers Asia Holdings Ltd. (“Weight Watchers Asia”), a direct, wholly-
owned subsidiary of the Company, and Danone Dairy Asia (“Danone 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 Republic of China. Pursuant to the terms of the joint venture agreement, Weight
Watchers Asia and Danone Asia owned 51% and 49%, respectively, of the joint venture entity, Weight Watchers
Danone China Limited (together with all of its businesses, the “China Joint Venture”). Because the Company had
a direct controlling financial interest in the China Joint Venture, it consolidated the entity from the first quarter of
fiscal 2008.
On April 27, 2011, Weight Watchers Asia entered into a share purchase agreement with Danone Asia,
pursuant to which Weight Watchers Asia acquired Danone Asia’s 49% minority equity interest in the China Joint
Venture as of that date for consideration of $1. Effective April 27, 2011, the date of the acquisition of Danone
F-11