WeightWatchers 2012 Annual Report Download - page 76

in the future will be made at the discretion of our Board of Directors, after taking into account our financial
results, capital requirements and other factors it may deem relevant. Our Board of Directors may decide at any
time to increase or decrease the amount of dividends or discontinue the payment of dividends based on these
factors. The WWI Credit Facility also contains restrictions on our ability to pay dividends on our common stock.
The WWI Credit Facility provides that we are permitted to pay dividends and extraordinary dividends, as
well as repurchase shares of our common stock, so long as we are not in default under the WWI Credit Facility
agreement. However, payment of extraordinary dividends and stock repurchases shall not exceed $150.0 million
in the aggregate in any fiscal year if net debt to EBITDA (as defined in the WWI Credit Facility agreement) is
greater than or equal to 3.75:1 and an investment grade rating date (as defined in the WWI Credit Facility
agreement) has not occurred. We do not expect this restriction to impair our ability to pay dividends or make
stock repurchases, but it could do so in the future.
Contractual Obligations
We are obligated under non-cancelable operating leases primarily for office and rent facilities. Consolidated
rent expense charged to operations under all our leases for fiscal 2012 was approximately $40.5 million.
The following table summarizes our future contractual obligations as of the end of fiscal 2012:
Payment Due by Period
Total
Less than
1 Year 1-3 Years 3-5 Years
More than
5 Years
(in millions)
Long-Term Debt(1)
Principal ................................... $2,406.4 $114.7 $514.8 $ 996.2 $780.7
Interest .................................... 339.3 67.0 144.2 82.4 45.7
Operating leases ................................. 274.5 40.0 67.8 45.7 121.0
Other long-term obligations(2) ....................... 3.5 (1.5) (1.8) (1.3) 8.1
Total ...................................... $3,023.7 $220.2 $725.0 $1,123.0 $955.5
(1) Due to the fact that all of our debt is variable rate based, we have assumed for purposes of this table that the interest rate on all of our
debt as of the end of fiscal 2012 remains constant for all periods presented.
(2) “Other long-term obligations” primarily consist of deferred rent costs. The provision for income tax contingencies included in other long-
term liabilities on the consolidated balance sheet is not included in the table above due to the fact that the Company is unable to estimate
the timing of payment for this liability.
We currently plan to meet our long-term debt obligations by using cash flows provided by operating
activities and opportunistically using other means to repay or refinance our obligations as we determine
appropriate. We believe that cash flows from operating activities, together with borrowings available under our
Revolver, will be sufficient for the next 12 months to fund currently anticipated capital expenditure requirements,
debt service requirements and working capital requirements.
Franchise Acquisitions
We did not acquire any franchises in fiscal 2011 and fiscal 2010. In fiscal 2012, we made the following
franchise acquisitions:
In September 2012, we acquired substantially all of the assets of our Southeastern Ontario and Ottawa,
Canada franchisee, Slengora Limited, for a net purchase price of $16.8 million.
In November 2012, we acquired substantially all of the assets of our Adirondacks franchisee, Weight
Watchers of the Adirondacks, Inc., for a purchase price of $3.4 million.
In December 2012, we acquired substantially all of the assets of our Memphis, Tennessee franchisee,
Weight Watchers of the Mid-South, Inc., for a purchase price of $10.0 million.
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