WeightWatchers 2015 Annual Report Download - page 91

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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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
($1,135), goodwill ($34,124), customer relationship value ($473), inventory ($218), fixed assets ($182) and
prepaid expenses ($3) offset by deferred revenue of $1,135. The franchise rights acquired were amortized over a
ten month useful life.
On July 15, 2013, the Company acquired substantially all of the assets of its West Virginia franchisee,
Weight Watchers of West Virginia, Inc., for a net purchase price of $16,028 less assumed assets, plus assumed
liabilities, net of $28. The total purchase price has been allocated to franchise rights acquired ($10,131), goodwill
($5,212), customer relationship value ($448) and fixed assets ($209).
On July 22, 2013, the Company acquired substantially all of the assets of its Columbus, Ohio franchisee,
Weight Watchers of Columbus, Inc., for a net purchase price of $23,357 plus assumed liabilities of $143 and its
Reno, Nevada franchisee, Weight Watchers of Northern Nevada, Inc., for a net purchase price of $3,969 plus
assumed liabilities of $31. The aggregate total purchase price has been allocated to franchise rights acquired
($3,314), goodwill ($23,549), customer relationship value ($494), fixed assets ($116) and inventory ($27). The
franchise rights acquired for the Columbus, Ohio franchise purchase were amortized over a five month useful
life.
On October 28, 2013, the Company acquired substantially all of the assets of its Manitoba, Canada
franchisee, Weight Watchers of Manitoba Ltd., for a net purchase price of $5,197 plus assumed liabilities of
$28 and its Franklin and St. Lawrence Counties, New York franchisee, Weight Watchers of Franklin and St.
Lawrence Counties Inc., for a net purchase price of $274 plus assumed liabilities of $1. The total purchase price
of the Manitoba, Canada franchisee has been allocated to franchise rights acquired ($28), goodwill ($4,946),
customer relationship value ($249), inventory ($1) and prepaid expenses ($1). The franchise rights acquired were
amortized over a two month useful life. The total purchase price of the Franklin and St. Lawrence Counties,
New York franchisee has been allocated to franchise rights acquired ($38), goodwill ($223), customer
relationship value ($13) and prepaid expenses ($1). The franchise rights acquired were amortized over a nine
month useful life.
The weighted-average amortization period of the customer relationships acquired in the above acquisitions
was approximately 15 weeks. Due to the short-term nature of this asset, its estimated fair value has been recorded
as a component of prepaid expenses and other current assets. The acquisitions resulted in goodwill related to,
among other things, expected synergies in operations. The goodwill recorded in connection with these
acquisitions represents the intangible assets that did not qualify for separate recognition in the financial
statements. The Company expects that substantially all of the goodwill recorded in connection with the above
acquisitions will be deductible for tax purposes. The effect of these franchise acquisitions was not material to the
Company’s consolidated financial position, results of operations, or operating cash flows in the periods
presented.
Acquisition of Additional Equity Interest in Brazil
Prior to March 12, 2014, the Company had owned 35% of VPM, a Brazilian limited liability partnership. On
March 12, 2014, the Company acquired an additional 45% equity interest in VPM for a net purchase price of
$14,181 less cash acquired of $2,262. VPM was converted into a joint-stock corporation prior to closing and
subsequently operates as a subsidiary of the Company with rights to conduct typical business lines. As a result of
the acquisition, the Company gained a direct controlling financial interest in VPM and began to consolidate this
entity as of the date of acquisition.
F-16