WeightWatchers 2013 Annual Report Download - page 100

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
On July 15, 2013, the Company acquired substantially all of the assets of its West Virginia franchisee,
Weight Watchers of West Virginia, Inc., for a net purchase price of $16,028 less assumed assets, plus assumed
liabilities, net of $28. The total purchase price has been allocated to franchise rights acquired ($10,131), goodwill
($5,212), customer relationship value ($448) and fixed assets ($209).
On July 22, 2013, the Company acquired substantially all of the assets of its Columbus, Ohio franchisee,
Weight Watchers of Columbus, Inc., for a net purchase price of $23,357 plus assumed liabilities of $143 and its
Reno, Nevada franchisee, Weight Watchers of Northern Nevada, Inc., for a net purchase price of $3,969 plus
assumed liabilities of $31. The aggregate total purchase price has been allocated to franchise rights acquired
($19,643), goodwill ($7,220), customer relationship value ($494), fixed assets ($116) and inventory ($27).
On October 28, 2013, the Company acquired substantially all of the assets of its Manitoba, Canada
franchisee, Weight Watchers of Manitoba Ltd., for a net purchase price of $5,197 plus assumed liabilities of $28
and its Franklin and St. Lawrence Counties, New York franchisee, Weight Watchers of Franklin and St.
Lawrence Counties Inc., for a net purchase price of $274 plus assumed liabilities of $1. The total purchase price
of the Manitoba, Canada franchisee has been preliminarily allocated to franchise rights acquired ($4,525),
goodwill ($449), customer relationship value ($249), inventory ($1) and prepaid expenses ($1). The total
purchase price of the Franklin and St. Lawrence Counties, New York franchisee has been preliminarily allocated
to franchise rights acquired ($238), goodwill ($23), customer relationship value ($13) and prepaid expenses ($1).
The weighted-average amortization period of the customer relationships acquired in the above acquisitions
was approximately 15 weeks. Due to the short-term nature of this asset, its estimated fair value has been recorded
as a component of prepaid expenses and other current assets. The acquisitions resulted in goodwill related to,
among other things, expected synergies in operations. The goodwill recorded in connection with these
acquisitions represents the intangible assets that did not qualify for separate recognition in the financial
statements. The Company expects that $16,953 of the total $17,530 of goodwill recorded in connection with the
above acquisitions will be deductible for tax purposes. The effect of these franchise acquisitions was not material
to the Company’s consolidated financial position, results of operations, or operating cash flows in the periods
presented.
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
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
Asia’s minority equity interest by Weight Watchers Asia, the Company owns 100% of the China Joint Venture
and no longer accounts for a non-controlling interest in the China Joint Venture. The noncontrolling interest that
had been reflected on the Company’s balance sheet was reclassified to retained earnings.
F-14