WeightWatchers 2013 Annual Report Download - page 99

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
incurred deferred financing costs of $26,248 associated with the Tender Offer (as defined in Note 7). The
Company wrote-off fees in connection with the Tender Offer which resulted in the Company recording a charge
of $1,328 in early extinguishment of debt. During the fiscal year ended January 1, 2011, the Company incurred
deferred financing costs of $11,483 associated with the refinancing of the Company’s then existing credit
facilities. 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 28, 2013, December 29, 2012 and December 31, 2011
was $7,672, $7,070 and $4,825, respectively.
Accumulated Other Comprehensive Income:
The Company’s accumulated other comprehensive income includes net income, changes in the fair value of
derivative instruments and the effects of foreign currency translations. At December 28, 2013 and December 29,
2012, the cumulative balance of changes in fair value of derivative instruments, net of taxes, was $(4,603) and
$(6,602), respectively. At December 28, 2013 and December 29, 2012, the cumulative balance of the effects of
foreign currency translations, net of taxes, was $13,120 and $19,461, 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 of acquired franchisees have been included in the consolidated operating results of the
Company since the applicable date of acquisition. During fiscal 2013 and fiscal 2012, the Company acquired
certain assets of its franchisees as outlined below. There were no key franchise acquisitions in fiscal 2011.
On September 10, 2012, the Company acquired substantially all of the assets of its Southeastern Ontario and
Ottawa, Canada franchisee, Slengora Limited, for a net purchase price of $16,755 plus assumed liabilities of
$245. The total purchase price has been allocated to franchise rights acquired ($9,871), goodwill ($6,779),
customer relationship value ($180), fixed assets ($81), inventory ($66) and prepaid expenses ($23).
On November 2, 2012, the Company acquired substantially all of the assets of its Adirondacks franchisee,
Weight Watchers of the Adirondacks, Inc., for a purchase price of $3,400. The total purchase price has been
allocated to franchise rights acquired ($2,216), goodwill ($1,156), customer relationship value ($37), inventory
($29) and prepaid expenses ($10) offset by deferred revenue of $48.
On December 20, 2012, the Company acquired substantially all of the assets of its Memphis, Tennessee
franchisee, Weight Watchers of the Mid-South, Inc., for a purchase price of $10,000. The total purchase price has
been allocated to franchise rights acquired ($8,396), goodwill ($1,461), customer relationship value ($209),
inventory ($35), receivables ($9) and fixed assets ($4) offset by deferred revenue of $114.
On March 4, 2013, the Company acquired substantially all of the assets of its Alberta and Saskatchewan,
Canada franchisees, Weight Watchers of Alberta Ltd. and Weight Watchers of Saskatchewan Ltd., for an
aggregate purchase price of $35,000. The total purchase price has been allocated to franchise rights acquired
($30,633), goodwill ($4,626), customer relationship value ($473), inventory ($218), fixed assets ($182) and
prepaid expenses ($3) offset by deferred revenue of $1,135.
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