WeightWatchers 2015 Annual Report Download - page 68

was approximately 3.93%, 3.90%, and 3.65% per annum at the end of fiscal 2015, fiscal 2014 and fiscal 2013,
respectively. The weighted average interest rate on our debt, including the impact of swaps, was approximately
5.03%, 4.93%, and 4.08% per annum at the end of fiscal 2015, fiscal 2014 and fiscal 2013, respectively.
Borrowings under the Credit Agreement bear interest at a rate equal to, at our 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%. Under the terms of the Credit Agreement, in the event we receive 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 both of the Term Facilities would increase by 25 basis points. On February 21, 2014, both S&P and
Moody’s issued revised corporate ratings of the Company of B+ and B1, respectively. As a result, effective
February 21, 2014, the applicable margin on borrowings under the Tranche B-1 Term Facility went from 2.75%
to 3.00% and on borrowings under the Tranche B-2 Term Facility went from 3.00% to 3.25%. The applicable
margin relating to the Revolving Facility will fluctuate depending upon our Consolidated Leverage Ratio. At
January 2, 2016, borrowings under the Tranche B-1 Term Facility bore interest at LIBOR plus an applicable
margin of 3.00% and borrowings under the Tranche B-2 Term Facility bore interest at LIBOR plus an applicable
margin of 3.25%. Based on our Consolidated Leverage Ratio as of January 2, 2016, borrowings under the
Revolving Facility bore interest at LIBOR plus an applicable margin of 2.50%. On a quarterly basis, we will pay
a commitment fee to the lenders under the Revolving Facility in respect of unutilized commitments thereunder,
which commitment fee will fluctuate, but in no event exceed 0.50% per annum, depending upon our
Consolidated Leverage Ratio. At our Consolidated Leverage Ratio of 7.52:1.00 as of January 2, 2016, the
commitment fee was 0.50% per annum. We also will pay customary letter of credit fees and fronting fees under
the Revolving Facility.
The Credit Agreement contains customary covenants including covenants that, in certain circumstances,
restrict our ability to incur additional indebtedness, pay dividends on and redeem capital stock, make other
payments, including investments, sell our assets and enter into consolidations, mergers and transfers of all or
substantially all of our assets. The WWI Credit Facility does not require us to meet any financial maintenance
covenants and is guaranteed by certain of our existing and future subsidiaries. Substantially all of our assets
secure the WWI Credit Facility.
Dividends
On October 30, 2013, we announced that we suspended our quarterly cash dividend. We currently intend to
use the annual cash savings to preserve financial flexibility while funding our strategic growth initiatives and
building cash for future debt repayments. Any future determination to declare and pay dividends will be made at
the discretion of our Board of Directors, after taking into account our financial results, capital requirements and
other factors it may deem relevant. The WWI Credit Facility also contains restrictions on our ability to pay
dividends on our common stock.
The WWI Credit Facility provides that we are permitted to pay dividends and extraordinary dividends, as
well as repurchase shares of our common stock, so long as we are not in default under the WWI Credit Facility
agreement. However, payment of extraordinary dividends and stock repurchases shall not exceed $100.0 million
in the aggregate in any fiscal year if the Consolidated Leverage Ratio is greater than 3.25:1. As of January 2,
2016, our Consolidated Leverage Ratio was greater than 3.25:1 and we expect that it will remain above 3.25:1 for
the foreseeable future.
Contractual Obligations
We are obligated under non-cancelable agreements primarily for office and rent facilities operating leases.
Consolidated rent expense charged to operations under all our leases for fiscal 2015 was approximately
$42.1 million.
65