WeightWatchers 2015 Annual Report Download - page 110

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
In January 2009, the Company entered into a forward-starting interest rate swap which had an effective date
of January 4, 2010 and a termination date of January 27, 2014. From December 29, 2012 through April 1, 2013,
this swap had qualified for hedge accounting, and therefore changes in the fair value of this derivative were
recorded in accumulated other comprehensive income (loss). Effective April 2, 2013, due to the Company’s debt
refinancing, the Company ceased the application of hedge accounting for this swap. Accordingly, changes in the
fair value of this swap were recorded in earnings subsequent to April 2, 2013 and were immaterial for the fiscal
year ended January 3, 2015.
On July 26, 2013, in order to hedge an additional portion of its variable rate debt, the Company entered into
a forward-starting interest rate swap with an effective date of March 31, 2014 and a termination date of April 2,
2020. The initial notional amount of this swap was $1,500,000. During the term of this swap, the notional amount
will decrease from $1,500,000 effective March 31, 2014 to $1,250,000 on April 3, 2017 with a further reduction
to $1,000,000 on April 1, 2019. This interest rate swap effectively fixes the variable interest rate on the notional
amount of this swap at 2.38%. This swap qualifies for hedge accounting and, therefore, changes in the fair value
of this swap have been recorded in accumulated other comprehensive income (loss).
As of January 2, 2016 and January 3, 2015, cumulative unrealized losses for qualifying hedges were
reported as a component of accumulated other comprehensive loss in the amounts of $23,135 ($38,053 before
taxes) and $21,856 ($35,830 before taxes), respectively.
The Company is hedging forecasted transactions for periods not exceeding the next six years. The Company
expects approximately $10,796 ($17,698 before taxes) of derivative losses included in accumulated other
comprehensive loss at January 2, 2016, based on current market rates, will be reclassified into earnings within the
next 12 months.
18. Accumulated Other Comprehensive Loss
With respect to the disclosure of the amounts reclassified from accumulated other comprehensive income
for the fiscal year ended January 3, 2015 the Company has revised the amounts previously disclosed to correct
those amounts by increasing the amount reclassified related to the Loss on Qualifying Hedges from $7,413 to
$19,815 and $4,522 to $12,087 on a pre- and after-tax basis, respectively.
F-35