WeightWatchers 2015 Annual Report Download - page 63

of $241.5 million at the end of fiscal 2015 will provide us with sufficient liquidity to meet our obligations for the
next twelve months, including our April 2016 debt maturity obligation of $144.3 million. Our cash on hand of
$241.5 million at the end of fiscal 2015 includes the $43.2 million cash payment we received on October 19,
2015 in connection with the Winfrey Transaction and the $48.0 million of proceeds from our revolver borrowing
under the Revolving Facility. The revolver borrowing is classified as a short-term liability in consideration of the
fact that the terms of the Revolving Facility require an assessment as to whether there have been any material
adverse changes with respect to the Company in connection with our monthly interest elections. Although the
revolver borrowing is classified as a short-term liability, absent any change in fact and circumstance, we have the
ability to extend and not repay the Revolving Facility until its due date of April 2, 2018.
Balance Sheet Working Capital
The following table sets forth certain relevant measures of our balance sheet working capital at:
January 2,
2016
January 3,
2015
Increase/
(Decrease)
(in millions)
Total current assets ................................... $359.0 $ 425.7 $ (66.7)
Total current liabilities ................................. 503.1 431.7 71.4
Working capital deficit ................................ (144.2) (6.0) (138.1)
Cash and cash equivalents .............................. 241.5 301.2 (59.7)
Current portion of long-term debt ........................ 213.3 80.7 132.6
Working capital deficit, excluding change in cash and cash
equivalents and current portion of long-term debt .......... $(172.4) $(226.5) $ 54.1
We generally operate with negative working capital that is driven in part by our commitment and
subscription plans which are our primary payment method. These plans require members and subscribers to pay
us for meetings and Online subscription products, respectively, as applicable, before we pay for our obligations
in the normal course of business. These prepayments are recorded as a current liability on our balance sheet
which has resulted in, and in certain circumstances has helped drive, negative working capital. This core
characteristic of our business model is expected to continue. However, during a period in which revenue is
declining, we get less working capital benefit from this deferred revenue.
Including changes in cash and cash equivalents and the current portion of long-term debt, our working
capital deficit increased by $138.1 million to $144.2 million at January 2, 2016 from $6.0 million at January 3,
2015. This increase in our working capital deficit was driven in large part by the principal debt maturity payment
of $144.3 million due on April 2, 2016, reflected in current portion of long-term debt as of January 2, 2016
(included in long-term as of January 3, 2015), and to a lesser extent the decline in year-end cash in fiscal 2015
from fiscal 2014 of $59.7 million. Prepayments of debt during fiscal 2015 as detailed in the following paragraph
totaled $150.5 million, which more than offset cash provided by operating activities, the $43.2 million cash
payment we received in connection with the Winfrey Transaction and the $48.0 million of proceeds from our
revolver borrowing under our Revolving Facility.
On March 25, 2015, we paid an aggregate amount of cash proceeds totaling $57.4 million plus an amount
sufficient to pay accrued and unpaid interest on the amount prepaid to prepay $63.1 million in aggregate
principal amount of term loans under the Tranche B-1 Term Facility. In addition, we made a voluntary
prepayment at par of $2.5 million in respect of such term loans under the Tranche B-1 Term Facility to reduce
our then remaining excess cash flow prepayment obligation. For a discussion of this obligation, see “—Long-
Term Debt”. On June 26, 2015, we paid an aggregate amount of cash proceeds totaling $77.2 million plus an
amount sufficient to pay accrued and unpaid interest on the amount prepaid to prepay $84.9 million in aggregate
principal amount of term loans under the Tranche B-1 Term Facility. After making these prepayments and
scheduled debt repayments of $21.0 million in fiscal 2015, the current portion of our long-term debt increased to
$213.3 million versus the end of fiscal 2014.
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