WeightWatchers 2013 Annual Report Download - page 104

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
At December 28, 2013, the Company had $2,388,000 outstanding under the WWI Credit Facility, consisting
entirely of term loans and there were no loans outstanding under the Revolving Facility. In addition, at
December 28, 2013, the Revolving Facility had $1,554 in issued but undrawn letters of credit outstanding
thereunder and $248,446 in available unused commitments thereunder. The proceeds from borrowings under the
Revolving Facility (including swing line loans and letters of credit) will be used for working capital and general
corporate purposes.
Borrowings under the New Credit Agreement bear interest at a rate equal to, at the Company’s option,
LIBOR plus an applicable margin or a base rate plus an applicable margin. LIBOR under the Tranche B-2 Term
Facility is subject to a minimum interest rate of 0.75% and the base rate under the Tranche B-2 Term Facility is
subject to a minimum interest rate of 1.75%. The applicable margin relating to both of the Term Facilities will
increase by 25 basis points in the event that the Company receives a corporate rating of BB- (or lower) from S&P
and a corporate rating of Ba3 (or lower) from Moody’s. The applicable margin relating to the Revolving Facility
will fluctuate depending upon the Company’s Consolidated Leverage Ratio (as defined in the New Credit
Agreement). At December 28, 2013, borrowings under the Tranche B-1 Term Facility bore interest at LIBOR
plus an applicable margin of 2.75% and borrowings under the Tranche B-2 Term Facility bore interest at LIBOR
plus an applicable margin of 3.00%. At the Company’s Consolidated Leverage Ratio as of December 28, 2013,
had there been any borrowings under the Revolving Facility, it would have borne interest at LIBOR plus an
applicable margin of 2.25% or base rate plus an applicable margin of 1.25%. On a quarterly basis, the Company
will pay a commitment fee to the lenders under the Revolving Facility in respect of unutilized commitments
thereunder, which commitment fee will fluctuate depending upon the Company’s Consolidated Leverage Ratio.
At the Company’s Consolidated Leverage Ratio as of December 28, 2013, the commitment fee was 0.40% per
annum. The Company also will pay customary letter of credit fees and fronting fees under the Revolving Facility.
The New Credit Agreement contains customary covenants including covenants that, in certain
circumstances, restrict the Company’s ability to incur additional indebtedness, pay dividends on and redeem
capital stock, make other payments, including investments, sell its assets and enter into consolidations, mergers
and transfers of all or substantially all of its assets. The Revolving Facility requires the Company to not exceed a
specified Consolidated Leverage Ratio, but only if borrowings under the Revolving Facility exceed 20.0% of
revolving commitments as of the end of such fiscal quarter. As of December 28, 2013, borrowings in excess of
$50,000 would require us to not exceed such ratio. As of December 28, 2013, there were no borrowings under
our Revolving Facility and total letters of credit issued were $1,554. The Term Facilities do not require the
Company to maintain any financial ratios. The WWI Credit Facility is guaranteed by certain of the Company’s
existing and future subsidiaries. Substantially all of the Company’s assets secure the WWI Credit Facility.
At December 28, 2013 and December 29, 2012, the Company’s debt consisted entirely of variable-rate
instruments. Interest rate swaps were entered into to hedge a portion of the cash flow exposure associated with
the Company’s variable-rate borrowings. The average interest rate on the Company’s debt, exclusive of the
impact of swaps, was approximately 3.65% and 2.99% per annum at December 28, 2013 and December 29,
2012, respectively. The average interest rate on our debt, including the impact of swaps, was approximately
4.08% and 3.50% per annum at December 28, 2013 and December 29, 2012, respectively.
F-18