<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period year ended October 28, 2000
Commission File no. 000-03389
WEIGHT WATCHERS INTERNATIONAL, INC.
-------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Virginia 11-6040273
------------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
175 Crossways Park West, Woodbury, New York 11797-2055
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (516) 390-1400
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ____
------
The number of common shares outstanding as of October 28, 2000 was
23,800,000.
PART I - - FINANCIAL INFORMATION
<PAGE> 2
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION PAGE NO.
------------------------------ --------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of October 28, 2000 (unaudited) and
April 29, 2000 2
Unaudited Consolidated Statements of Operations and Comprehensive
Income for the three months ended October 28, 2000 and October 23, 1999 3
Unaudited Consolidated Statements of Operations and Comprehensive
Income for the six months ended October 28, 2000 and October 23, 1999 4
Unaudited Consolidated Statements of Cash Flows for the six months
ended October 28, 2000 and October 23, 1999 5
Notes to Unaudited Consolidated Financial Statements 6 - 17
Item 2. Management's Discussion and Analysis of Financial Condition 18 - 20
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
Part II. OTHER INFORMATION 22 - 23
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters To a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
<PAGE> 3
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 2
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
OCTOBER 28, APRIL 29,
2000 2000
<S> <C> <C>
ASSETS (UNAUDITED)
Current assets
Cash and cash equivalents $ 55,890 $ 44,043
Receivables, net 14,978 12,877
Notes receivable, current 1,943 2,791
Inventories 12,110 9,328
Prepaid expenses, other 10,304 8,454
--------- ---------
Total current assets 95,225 77,493
Property and equipment, net 6,641 7,001
Notes and other receivables, noncurrent 6,154 7,045
Goodwill, net 150,452 152,565
Trademarks and other intangible assets, net 6,373 7,163
Deferred income taxes 67,561 67,574
Deferred financing costs, other 14,488 15,366
--------- ---------
Total assets $ 346,894 $ 334,207
========= =========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND
STOCKHOLDERS' DEFICIT
Current liabilities
Short-term borrowings due to related party $ 1,602 $ 1,489
Portion of long-term debt due within one year 14,120 14,120
Accounts payable 10,925 12,362
Accrued liabilities 49,272 39,062
Income taxes 8,606 6,786
Deferred revenue 7,407 4,632
--------- ---------
Total current liabilities 91,932 78,451
Long-term debt 446,350 460,510
Deferred income taxes 2,522 2,941
Other 96 546
--------- ---------
Total long-term debt and other liabilities 448,968 463,997
Redeemable preferred stock 25,746 25,875
Stockholders' deficit
Common stock, par value $0 per share, 23,800 shares authorized, issued and outstanding -- --
Accumulated deficit (211,352) (231,663)
Accumulated other comprehensive loss (8,400) (2,453)
--------- ---------
Total stockholders' deficit (219,752) (234,116)
--------- ---------
Total liabilities, redeemable preferred stock, and stockholders' deficit $ 346,894 $ 334,207
========= =========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 4
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 3
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------
OCTOBER 28, OCTOBER 23,
2000 1999
(UNAUDITED)
<S> <C> <C>
Revenues, net $ 101,113 $83,931
Cost of revenues 53,187 43,947
--------- -------
Gross profit 47,926 39,984
Marketing expenses 10,964 11,406
Selling, general and administrative expenses 11,757 9,824
Transaction costs -- 8,345
--------- -------
Operating income 25,205 10,409
Interest income 1,117 1,451
Interest expense 14,943 5,020
Other (income) expenses, net (177) 3,096
--------- -------
Income before income taxes and minority interest 11,556 3,744
Provision for income taxes 2,450 1,287
--------- -------
Income before minority interest 9,106 2,457
Minority interest 14 218
--------- -------
Net income 9,092 2,239
Other comprehensive income:
Foreign currency translation adjustment (5,060) 2,519
--------- -------
Comprehensive income $ 4,032 $ 4,758
========= =======
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 5
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 4
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------------------
OCTOBER 28, OCTOBER 23,
2000 1999
(UNAUDITED)
<S> <C> <C>
Revenues, net $ 204,655 $176,105
Cost of revenues 100,973 86,656
--------- --------
Gross profit 103,682 89,449
Marketing expenses 21,049 20,175
Selling, general and administrative expenses 23,176 22,218
Transaction costs -- 8,345
--------- --------
Operating income 59,457 38,711
Interest income 1,998 4,575
Interest expense 29,919 6,474
Other expenses, net 4,083 4,261
--------- --------
Income before income taxes and minority interest 27,453 32,551
Provision for income taxes 6,283 12,625
--------- --------
Income before minority interest 21,170 19,926
Minority interest 109 592
--------- --------
Net income 21,061 19,334
Other comprehensive income:
Foreign currency translation adjustment (5,947) 12,465
--------- --------
Comprehensive income $ 15,114 $ 31,799
========= ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 6
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------------------
OCTOBER 28, OCTOBER 23,
2000 1999
(UNAUDITED)
<S> <C> <C>
Operating activities:
Net income $ 21,061 $ 19,334
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization 5,767 4,743
Deferred tax benefit (405) (512)
Accounting for equity investment 10,500 --
Allowance for doubtful accounts 191 (676)
Reserve for inventory obsolescence 2,122 1,471
Other items, net (1,018) (2,347)
Changes in cash due to:
Receivables (3,953) 17,868
Inventories (4,998) (2,957)
Prepaid expense (1,870) 380
Due to related parties 113 (14,195)
Accounts payable (5,043) 2,611
Accrued liabilities 10,369 (1,817)
Deferred revenue 2,806 (3,602)
Income taxes 2,116 (2,324)
-------- ---------
Cash provided by operating activities 37,758 17,977
-------- ---------
Investing activities:
Capital expenditures (1,436) (999)
Advances to equity investment (8,500) --
Acquisitions of minority interest (2,400) (15,900)
Other items, net 459 1,180
-------- ---------
Cash used for investing activities (11,877) (15,719)
-------- ---------
Financing activities:
Net increase (decrease) in short-term borrowings 3,658 (7,570)
Proceeds from borrowings -- 491,452
Repurchase of common stock -- (324,476)
Payment of dividends (879) (2,047)
Payments of long-term debt (7,060) --
Deferred financing costs -- (15,696)
Net Parent (settlements) advances -- (131,014)
-------- ---------
Cash (used for) provided by financing activities (4,281) 10,649
-------- ---------
Effect of exchange rate changes on cash and cash equivalents (9,753) 1,012
Net increase in cash and cash equivalents 11,847 13,919
Cash and cash equivalents, beginning of period 44,043 19,515
-------- ---------
Cash and cash equivalents, end of period $ 55,890 $ 33,434
======== =========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 7
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 6
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
The accompanying consolidated financial statements include the accounts of
Weight Watchers International, Inc. and Subsidiaries (the "Company"). The
consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America and
include amounts that are based on management's best estimates and judgments.
While all available information has been considered, actual amounts could
differ from those estimates. The consolidated financial statements are
unaudited but, in the opinion of management, reflect all adjustments
(consisting of normal recurring adjustments) necessary for a fair
presentation. This report should be read in conjunction with the Company's
annual report filed on Form 10K for the fiscal year ended April 29, 2000.
2. RECAPITALIZATION
On September 29, 1999, the Company effected a recapitalization and stock
purchase agreement (the "Transaction") with its former parent, H.J. Heinz
Company ("Heinz"). The Company redeemed shares of common stock from Heinz
for $349.5 million. The $349.5 million consisted of $324.5 million of cash
and $25.0 million of the Company's redeemable Series A Preferred Stock.
After the redemption, Artal Luxembourg S.A. purchased 94% of the Company's
remaining common stock from Heinz for $223.7 million. The Transaction was
financed through borrowings under credit facilities amounting to
approximately $237.0 million and by issuing Senior Subordinated Notes
amounting to $255.0 million, due 2009. The balance of the borrowings was
utilized to refinance debt incurred prior to the Transaction relating to
the transfer of ownership and acquisition of the minority interest in the
Weight Watchers businesses that operate in Australia and New Zealand. The
acquisition of the minority interest resulted in approximately $15.9
million of goodwill. In connection with the Transaction, the Company
incurred approximately $8.3 million in transaction costs and $15.9 million
in deferred financing costs. For U.S. Federal and State tax purposes, the
Transaction is being treated as a taxable sale under Section 338(h)(10) of
the Internal Revenue Code of 1986 as amended. As a result, for tax
purposes, the Company will record a step-up in the tax basis of net assets.
For financial reporting purposes, a valuation allowance of approximately
$72.1 million had been established against the corresponding deferred tax
asset as management has concluded it is more likely than not that this
amount will not be utilized to reduce future tax payments.
3. RECENTLY ISSUED ACCOUNTING STANDARDS:
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This statement established accounting
and reporting standards for derivative instruments. The statement requires
that an entity recognize all derivatives as either assets or liabilities in
the statement of financial position and measure those instruments at fair
value. In June 1999, the FASB issued SFAS No.137, "Accounting for
Derivative Instruments and Hedging Activities-Deferral of the Effective
Date of Statement 133," which postponed the adoption date of SFAS No. 133.
As such, the Company is not required to adopt the statement until fiscal
year ended 2002. The Company does not believe this standard will have a
material impact on its financial statements.
<PAGE> 8
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 7
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
4. LONG-TERM DEBT
In connection with the Transaction, the Company entered into a credit
facility ("Credit Facility") with The Bank of Nova Scotia, Credit Suisse
First Boston and certain other lenders providing (i) a $75.0 million term
loan A facility ("Term Loan A"), (ii) a $75.0 million term loan B facility
("Term Loan B"), (iii) an $87.0 million transferable loan certificate
("TLC") and (iv) a revolving credit facility with borrowings up to $30.0
million ("Revolving Credit Facility"). Borrowings under the Credit Facility
are paid quarterly and initially bear interest at a rate equal to LIBOR
plus (a) in the case of Term Loan A and the Revolving Credit Facility,
3.25% or, at the Company's option, the alternate base rate, as defined,
plus 2.25% or (b) in the case of Term Loan B and the TLC, 4.00% or, at the
Company's option, the alternate base rate plus 3.00%. At October 28, 2000,
the interest rates were 9.745% for Term Loan A and 10.870% for Term Loan B
and the TLC. Borrowings under Term Loan A and the Revolving Credit Facility
mature in six years and Term Loan B and the TLC mature in seven years. All
assets of the Company collateralize the Credit Facility. In addition, the
Company issued $150.0 million USD denominated and 100.0 million EUR
denominated principal amount of 13% Senior Subordinated Notes due 2009 (the
"Notes") to qualified institutional buyers under a private placement
offering pursuant to Rule 144A. At October 28, 2000, the 100.0 million EUR
notes translated into $84.1 million USD denominated equivalent. The impact
of the change in foreign exchange rates related to euro denominated debt
are reflected in the income statement. Interest is payable on the Notes
semi-annually on April 1 and October 1 of each year, commencing April 1,
2000. The Company uses interest rate swaps and foreign currency forward
contracts in association with its debt. The Notes are uncollateralized
senior subordinated obligations of the Company, subordinated in right of
payment to all existing and future senior indebtedness of the Company,
including the Credit Facility. Each of the aforementioned debt facilities
contains restrictive covenants and requires the Company to maintain certain
financial ratios, as defined.
The aggregate amounts of existing long-term debt maturing in each of the next
five years and thereafter are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
2001 $ 7,060
2002 14,120
2003 14,120
2004 14,120
2005 15,683
2006 and thereafter 395,367
--------
$460,470
========
</TABLE>
5. WEIGHT WATCHERS.COM NOTE
On October 1, 2000 the Company amended its loan agreement with Weight
Watchers.com increasing the aggregate principal amount from $10.0 million
to $23.5 million. On that date, the unpaid principal and accumulated
interest was rolled over into the new loan. The amount may be advanced
<PAGE> 9
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 8
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
at any time or from time to time prior to July 31, 2003. The note bears
interest at 13% per year. All principal and interest outstanding under the
note are scheduled to be payable on September 30, 2003. The note may be
prepaid at any time in whole or in part, without premium or penalty. As of
October 28, 2000, the Company has advanced Weight Watchers.com $10.5 million
pursuant to the note. The $10.5 million in advances were classified in other
expenses, net.
6. LEGAL
In November 2000, the Company reached an agreement with certain franchisees
regarding the sharing of profits of prior and future product sales. The
settlement provides for a payment of approximately $3.8 million and
releases the Company from any future obligation to the franchisees under
profit sharing arrangements which date back to 1969.
Due to the nature of its activities, the Company is, at times, subject to
pending and threatened legal actions that arise out of the normal course of
business. In the opinion of management, based in part upon advice of legal
counsel, the disposition of such matters will not have a material effect on
the consolidated financial statements.
7. SUBSEQUENT EVENT
Effective December 11, 2000, the Company signed an agreement to purchase
the assets and certain franchised territories operated by Weighco
Enterprises, Inc., Weighco of Northwest, Inc and Weighco of Southwest,
Inc.; for $83.8 million. The transaction will be accounted for by the
purchase method of accounting. Substantially, all of the purchase price of
the acquisition in excess of the net assets acquired will be recorded as
intangibles.
It is anticipated that the transaction will be finalized in January 2001.
8. GUARANTOR SUBSIDIARIES
The Company's payment obligations under the Senior Subordinated Notes are
fully and unconditionally guaranteed on a joint and several basis by the
following wholly-owned subsidiaries: 58 WW Food Corp.; Waist Watchers, Inc.;
Weight Watchers Camps, Inc.; W.W. Camps and Spas, Inc.; Weight Watchers
Direct, Inc.; W/W Twentyfirst Corporation; W.W. Weight Reduction Services,
Inc.; W.W.I. European Services Ltd.; W.W. Inventory Service Corp.; Weight
Watchers North America, Inc.; Weight Watchers UK Holdings Ltd.; Weight
Watchers International Holdings Ltd.; Weight Watchers (U.K.) Limited; Weight
Watchers (Accessories & Publication) Ltd.; Weight Watchers (Food Products)
Limited; Weight Watchers New Zealand Limited; Weight Watchers International
Pty Limited; Fortuity Pty Ltd.; and Gutbusters Pty Ltd. (collectively, the
"Guarantor Subsidiaries"). The obligations of each Guarantor Subsidiary
under its guarantee of the Notes are subordinated to such subsidiary's
obligations under its guarantee of the new senior credit facility.
The following presentations are consolidating financial information for
Weight Watchers International, Inc. ("Parent Company"), the Guarantor
Subsidiaries and the Non-Guarantor Subsidiaries (primarily companies
incorporated in European countries other than the United Kingdom). In the
Company's opinion, separate financial statements and other disclosures
concerning each of the Guarantor Subsidiaries would not provide additional
information that is material to investors. Therefore, the Guarantor
Subsidiaries are combined in the presentation below.
<PAGE> 10
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 9
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Investments in subsidiaries are accounted for by the Parent Company on the
equity method of accounting. Earnings of subsidiaries are, therefore,
reflected in the Parent Company's investments in subsidiaries' accounts.
The elimination entries eliminate investments in subsidiaries and
intercompany balances and transactions.
<PAGE> 11
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 10
SUPPLEMENTAL UNAUDITED CONSOLIDATING BALANCE SHEET
AS OF OCTOBER 28, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------------- --------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Currentt assets
Cash and cash equivalents $ 15,696 $ 29,356 $10,838 $ -- $ 55,890
Receivables, net 8,648 4,435 1,895 -- 14,978
Notes receivable, current 1,943 -- -- -- 1,943
Inventories -- 10,411 1,699 -- 12,110
Prepaid expenses, other 4,148 4,129 2,027 -- 10,304
Intercompany receivables (payables) (58,925) 57,056 1,869 -- --
--------- -------- ------- --------- --------
Total current assets (28,490) 105,387 18,328 -- 95,225
Investment in consolidated subsidiaries 184,351 -- -- (184,351) --
Property and equipment, net 1,867 3,629 1,145 -- 6,641
Notes and other receivables, noncurrent 6,154 -- -- -- 6,154
Goodwill, net 28,597 121,172 683 -- 150,452
Trademarks and other intangible assets, net 1,871 4,494 8 -- 6,373
Deferred income taxes (1,746) 69,307 -- -- 67,561
Deferred financing costs, other 13,952 367 169 -- 14,488
--------- -------- ------- --------- --------
Total assets $ 206,556 $304,356 $20,333 $(184,351) $346,894
========= ======== ======= ========= ========
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS EQUITY (DEFICIT)
Current liabilities
Short-term borrowings due to related party $ 1,602 $ -- $ -- $ -- $ 1,602
Portion of long-term debt due within one year 13,250 870 -- -- 14,120
Accounts payable 744 8,896 1,285 -- 10,925
Accrued liabilities 20,779 21,464 7,029 -- 49,272
Income taxes 1,411 4,633 2,562 -- 8,606
Deferred revenue -- 6,330 1,077 -- 7,407
--------- -------- ------- --------- --------
Total current liabilities 37,786 42,193 11,953 -- 91,932
Long-term debt 360,873 85,477 -- -- 446,350
Deferred income taxes 1,903 28 591 -- 2,522
Other -- -- 96 -- 96
--------- -------- ------- --------- --------
Total long term debt and other liabilities 362,776 85,505 687 -- 448,968
Redeemable preferred stock 25,746 -- -- -- 25,746
Stockholders' equity (deficit) (219,752) 176,658 7,693 (184,351) (219,752)
--------- -------- ------- --------- --------
Total liabilities, redeemable preferred
stock and stockholders' equity (deficit) $ 206,556 $304,356 $20,333 $(184,351) $346,894
========= ======== ======= ========= ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 12
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 11
SUPPLEMENTAL UNAUDITED CONSOLIDATING BALANCE SHEET
AS OF APRIL 29, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------------- --------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 10,984 $ 22,465 $10,594 $ -- $ 44,043
Receivables, net 6,006 5,606 1,265 -- 12,877
Notes receivable, current 2,791 -- -- -- 2,791
Inventories -- 7,827 1,501 -- 9,328
Prepaid expenses, other 3,594 3,488 1,372 -- 8,454
Intercompany receivables (payables) (32,114) 27,742 4,372 -- --
--------- -------- ------- --------- --------
Total current assets (8,739) 67,128 19,104 -- 77,493
Investment in consolidated subsidiaries 162,320 -- -- (162,320) --
Property and equipment, net 1,809 3,974 1,218 -- 7,001
Notes and other receivables, noncurrent 7,045 -- -- -- 7,045
Goodwill, net 25,833 125,977 755 -- 152,565
Trademarks and other intangible assets, net 1,960 5,193 10 -- 7,163
Deferred income taxes (9,854) 77,428 -- -- 67,574
Deferred financing costs, other 14,912 282 172 -- 15,366
--------- -------- ------- --------- --------
Total assets $ 195,286 $279,982 $21,259 $(162,320) $334,207
--------- -------- ------- --------- --------
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS EQUITY (DEFICIT)
Current liabilities
Short-term borrowings due to related party $ 1,489 $ -- $ -- $ -- $ 1,489
Portion of long-term debt due within one year 13,250 870 -- -- 14,120
Accounts payable 1,438 9,084 1,840 -- 12,362
Accrued liabilities 12,695 18,652 7,715 -- 39,062
Income taxes (1,846) 5,965 2,667 -- 6,786
Deferred revenue -- 3,824 808 -- 4,632
--------- -------- ------- --------- --------
Total current liabilities 27,026 38,395 13,030 -- 78,451
--
Long-term debt 374,598 85,912 -- -- 460,510
Deferred income taxes 1,903 390 648 -- 2,941
Other -- -- 546 -- 546
--------- -------- ------- --------- --------
Total long term debt and other liabilities 376,501 86,302 1,194 -- 463,997
Redeemable preferred stock 25,875 2,507 254 (2,761) 25,875
Stockholders' equity (deficit) (234,116) 152,778 6,781 (159,559) (234,116)
--------- -------- ------- --------- --------
Total liabilities, redeemable preferred
stock and stockholders' equity (deficit) $ 195,286 $279,982 $21,259 $(162,320) $334,207
--------- -------- ------- --------- --------
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 13
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 12
SUPPLEMENTAL UNAUDITED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED OCTOBER 28, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------------- --------------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues, net $ 8,187 $ 77,166 $15,760 $ -- $101,113
Cost of revenues 4,174 39,392 9,621 53,187
--------- -------- ------- --------- --------
Gross profit 4,013 37,774 6,139 -- 47,926
Marketing expenses 1,328 7,572 2,064 -- 10,964
Selling, general & administrative expenses 5,074 4,826 1,857 -- 11,757
--------- -------- ------- --------- --------
Operating income (loss) (2,389) 25,376 2,218 -- 25,205
Interest income 578 482 57 -- 1,117
Interest expense 9,715 5,223 5 -- 14,943
Other (income) expenses, net (628) 451 -- -- (177)
Equity in income of consolidated subsidiaries 18,329 -- -- (18,329) --
Franchise commission income (loss) 3,101 (2,285) (816) -- --
--------- -------- ------- --------- --------
Income before income taxes and minority interest 10,532 17,899 1,454 (18,329) 11,556
Provision for (benefit from) income taxes 1,440 (25) 1,035 -- 2,450
--------- -------- ------- --------- --------
Income before minority interest 9,092 17,924 419 (18,329) 9,106
Minority interest -- -- 14 -- 14
--------- -------- ------- --------- --------
Net income $ 9,092 $ 17,924 $ 405 $ (18,329) $ 9,092
========= ======== ======= ========= ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 14
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 13
SUPPLEMENTAL UNAUDITED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED OCTOBER 23, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues, net $ 7,949 $ 63,209 $ 12,773 $ -- $83,931
Cost of revenues 384 34,797 8,766 -- 43,947
-------- -------- -------- -------- -------
Gross profit 7,565 28,412 4,007 -- 39,984
Marketing expenses 1,700 7,571 2,135 -- 11,406
Selling, general & administrative expenses 2,419 6,118 1,287 -- 9,824
Transaction costs 8,345 -- -- -- 8,345
-------- -------- -------- -------- -------
Operating income (loss) (4,899) 14,723 585 -- 10,409
Interest income 294 746 411 -- 1,451
Interest expense 3,907 606 507 -- 5,020
Other (income) expenses, net 3,707 (620) 9 -- 3,096
Equity in income of consolidated subsidiaries 15,684 -- -- (15,684) --
Franchise commission income (loss) 2,198 (1,611) (587) -- --
-------- -------- -------- -------- -------
Income (loss) before income taxes and minority
interest 5,663 13,872 (107) (15,684) 3,744
Provision for (benefit from) income taxes 3,424 (2,213) 76 -- 1,287
-------- -------- -------- -------- -------
Income (loss) before minority interest 2,239 16,085 (183) (15,684) 2,457
Minority interest -- 189 29 -- 218
-------- -------- -------- -------- -------
Net income (loss) $ 2,239 $ 15,896 $ (212) $(15,684) $ 2,239
======== ======== ======== ======== =======
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 15
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 14
SUPPLEMENTAL UNAUDITED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 28, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues, net $ 16,114 $ 157,210 $ 31,331 $ -- $204,655
Cost of revenues 4,439 77,639 18,895 -- 100,973
-------- --------- -------- -------- --------
Gross profit 11,675 79,571 12,436 -- 103,682
Marketing expenses 2,428 15,277 3,344 -- 21,049
Selling, general & administrative expenses 9,571 9,936 3,669 -- 23,176
-------- --------- -------- -------- --------
--
Operating income (loss) (324) 54,358 5,423 -- 59,457
Interest income 1,034 817 147 -- 1,998
Interest expense 19,558 10,344 17 -- 29,919
Other expenses, net 3,724 352 7 -- 4,083
Equity in income of consolidated subsidiaries 33,627 -- -- (33,627) --
Franchise commission income (loss) 5,303 (4,015) (1,288) -- --
-------- --------- -------- -------- --------
Income before income taxes and minority
interest 16,358 40,464 4,258 (33,627) 27,453
Provision for (benefit from) income taxes (4,703) 9,507 1,479 -- 6,283
-------- --------- -------- -------- --------
Income before minority interest 21,061 30,957 2,779 (33,627) 21,170
Minority interest -- -- 109 -- 109
-------- --------- -------- -------- --------
Net income $ 21,061 $ 30,957 $ 2,670 $(33,627) $ 21,061
======== ========= ======== ======== ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 16
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 15
SUPPLEMENTAL UNAUDITED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 23, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues, net $ 15,838 $ 132,040 $ 28,227 $ -- $176,105
Cost of revenues 1,129 67,745 17,782 -- 86,656
-------- --------- -------- -------- --------
Gross profit 14,709 64,295 10,445 -- 89,449
Marketing expenses 3,292 13,399 3,484 -- 20,175
Selling, general & administrative expenses 7,837 11,070 3,311 -- 22,218
Transaction costs 8,345 -- -- -- 8,345
-------- --------- -------- -------- --------
Operating income (loss) (4,765) 39,826 3,650 -- 38,711
Interest income 911 1,527 2,137 -- 4,575
Interest expense 4,628 616 1,230 -- 6,474
Other expenses, net 4,084 110 67 -- 4,261
Equity in income of consolidated subsidiaries 31,264 -- -- (31,264) --
Franchise commission income (loss) 3,752 (2,607) (1,145) -- --
-------- --------- -------- -------- --------
Income before income taxes and minority
interest 22,450 38,020 3,345 (31,264) 32,551
Provision for income taxes 3,116 8,780 729 -- 12,625
-------- --------- -------- -------- --------
Income before minority interest 19,334 29,240 2,616 (31,264) 19,926
Minority interest -- 446 146 -- 592
-------- --------- -------- -------- --------
Net income $ 19,334 $ 28,794 $ 2,470 $(31,264) $ 19,334
======== ========= ======== ======== ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 17
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 16
SUPPLEMENTAL UNAUDITED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 28, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Operating activities:
Net income $ 21,061 $ 30,957 $ 2,670 $(33,627) $ 21,061
Adjustments to reconcile net income
to cash provided by operating
activities:
Depreciation and amortization 2,121 3,348 298 -- 5,767
Deferred tax provision (benefit) (8,108) 7,760 (57) -- (405)
Accounting for equity investment 10,500 -- -- -- 10,500
Allowance for doubtful accounts -- 191 -- -- 191
Reserve for inventory obsolescence -- 2,110 12 -- 2,122
Other items, net -- (572) (446) -- (1,018)
Changes in cash due to:
Receivables (4,232) 909 (630) -- (3,953)
Inventories -- (4,788) (210) -- (4,998)
Prepaid expense (554) (661) (655) -- (1,870)
Intercompany receivables/payables 26,811 (29,314) 2,503 -- --
Due to related parties 113 -- -- -- 113
Accounts payable (1,088) (3,400) (555) -- (5,043)
Accrued liabilities 8,084 2,969 (684) -- 10,369
Deferred revenue -- 2,537 269 -- 2,806
Income taxes 3,257 (1,036) (105) -- 2,116
-------- -------- -------- -------- --------
Cash provided by operating activities 57,965 11,010 2,410 (33,627) 37,758
-------- -------- -------- -------- --------
Investing activities:
Capital expenditures (300) (811) (325) -- (1,436)
Advances to equity investment (8,500) -- -- -- (8,500)
Acquisition of minority interest (2,400) -- -- -- (2,400)
Other items, net 48 361 50 -- 459
-------- -------- -------- -------- --------
Cash used for investing activities (11,152) (450) (275) -- (11,877)
-------- -------- -------- -------- --------
Financing activities:
Net increase (decrease) in short-term
borrowings 394 3,264 -- -- 3,658
Parent company investment in subsidiaries (22,031) -- -- 22,031 --
Payment of dividends (879) (4,355) (1,603) 5,958 (879)
Payments on long-term debt (6,625) (435) -- -- (7,060)
Net parent (settlements) advances -- -- 307 (307) --
-------- -------- -------- -------- --------
Cash used for financing activities (29,141) (1,526) (1,296) 27,682 (4,281)
-------- -------- -------- -------- --------
Effect of exchange rate changes on cash and cash
equivalents (12,960) (2,143) (595) 5,945 (9,753)
Net increase in cash and cash equivalents 4,712 6,891 244 -- 11,847
Cash and cash equivalents, beginning of period 10,984 22,465 10,594 -- 44,043
-------- -------- -------- -------- --------
Cash and cash equivalents, end of period $ 15,696 $ 29,356 $ 10,838 $ -- $ 55,890
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 18
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES 17
SUPPLEMENTAL UNAUDITED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 23, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
NON-
PARENT GUARANTOR GUARANTOR
COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Operating activities:
Net income $ 19,334 $ 28,794 $ 2,470 $(31,264) $ 19,334
Adjustments to reconcile net income
to cash provided by (used for) operating
activities:
Depreciation and amortization 1,326 3,146 350 (79) 4,743
Deferred tax provision (benefit) 3,159 (8,601) 4,930 -- (512)
Allowance for doubtful accounts (552) (132) 8 -- (676)
Reserve for inventory obsolescence -- 1,417 54 -- 1,471
Other items, net -- (2,158) (189) -- (2,347)
Changes in cash due to:
Receivables 6,752 1,722 9,394 -- 17,868
Inventories -- (2,803) (154) -- (2,957)
Prepaid expense 2,187 (2,140) 333 -- 380
Due from related parties (14,583) 388 -- -- (14,195)
Accounts payable 50 4,052 (1,491) -- 2,611
Accrued liabilities 10,963 (14,051) 1,271 -- (1,817)
Deferred revenue -- (3,875) 273 -- (3,602)
Income taxes 13,083 (14,922) (485) -- (2,324)
--------- -------- -------- -------- ---------
Cash provided by (used for) operating
activities 41,719 (9,163) 16,764 (31,343) 17,977
--------- -------- -------- -------- ---------
Investing activities:
Capital expenditures (166) (512) (321) -- (999)
Acquisitions of minority interest -- (15,900) -- -- (15,900)
Other items, net 150 958 (7) 79 1,180
--------- -------- -------- -------- ---------
Cash used for investing activities (16) (15,454) (328) 79 (15,719)
--------- -------- -------- -------- ---------
Financing activities:
Net decrease in short-term borrowings -- (914) (6,656) -- (7,570)
Proceeds from borrowings 404,260 87,192 -- -- 491,452
Repurchase of common stock (324,476) -- -- -- (324,476)
Payment of dividends (2,048) (3,123) (4,224) 7,348 (2,047)
Payments on long-term debt -- -- -- -- --
Deferred financing costs (15,696) -- -- -- (15,696)
Net Parent settlements (93,085) (57,424) (4,998) 24,493 (131,014)
--------- -------- -------- -------- ---------
Cash provided by (used for) financing
activities (31,045) 25,731 (15,878) 31,841 10,649
--------- -------- -------- -------- ---------
Effect of exchange rate changes on cash and cash
equivalents 662 261 666 (577) 1,012
Net increase in cash and cash equivalents 11,320 1,375 1,224 -- 13,919
Cash and cash equivalents, beginning of year (74) 12,376 7,213 -- 19,515
--------- -------- -------- -------- ---------
Cash and cash equivalents, end of year $ 11,246 $ 13,751 $ 8,437 $ -- $ 33,434
========= ======== ======== ======== =========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
<PAGE> 19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 18
COMPARISON OF THREE MONTHS ENDED OCTOBER 28, 2000 TO THREE MONTHS ENDED OCTOBER
23, 1999
Net revenues were $101.1 million for the three months ended October 28, 2000, an
increase of 21.5% from $83.2 million for the three months ended October 23, 1999
(excluding food royalties of $0.7 million). The increase in net revenues
resulted from increased attendance strong growth in classroom product sales and
a price increase in the majority of its North American NACO markets.
Cost of revenues was $53.2 million for the three months ended October 28, 2000,
an increase of 21.2% from $43.9 million for the three months ended October 23,
1999. This increase resulted from an increase in product sales and the number of
meetings held in Company-owned classrooms.
Marketing expenses were $11.0 million for the three months ended October 28,
2000, a decrease of 3.5% from $11.4 million for the three months ended October
23, 1999. As a percentage of revenue, marketing decreased from 13.6% to 10.9%
for the three months ended October 28, 2000.
Selling, general and administrative expenses increased by 20.4% to $11.8 million
for the three months ended October 28, 2000, as compared to $9.8 million for the
three months ended October 23, 1999. As a percentage of revenue, selling,
general, and administrative remained flat from year to year.
As a result of the above, operating income was $25.2 million for the three
months ended October 28, 2000, an increase of 39.2% from $18.1 million for the
three months ended October 23, 1999 (excluding revenues from food royalties of
$0.7 million and a one-time charge of $8.3 million for transaction costs).
Interest expense increased to $14.9 million for the three months ended October
28, 2000 from $5.0 million for the three months ended October 23, 1999 as a
result of borrowings related to the Transaction.
The effective income tax rate for the three months ended October 28, 2000 of
21.2% decreased from 34.4% for the three months ended October 23, 1999 due to
several factors. The decrease was primarily due to the benefit of utilizing a
net operating loss carryforward to reduce the current U.S. tax provision, with
limited offset to the deferred provision due to the existence of a valuation
allowance against the projected realization of the deferred tax asset.
COMPARISON OF SIX MONTHS ENDED OCTOBER 28, 2000 TO SIX MONTHS ENDED OCTOBER 23,
1999
Net revenues were $204.7 million for the six months ended October 28, 2000, an
increase of 17.4% from $174.3 million for the six months ended October 23, 1999
(excluding $1.8 from discontinued food royalties). This increase in net revenues
resulted primarily from increased attendance in most of our markets, strong
growth in classroom product sales and a price increase in the majority of our
NACO markets.
Cost of revenues was $101.0 million for the six months ended October 28, 2000,
an increase of 16.5% from $86.7 million for the six months ended October 23,
1999. This increase was primarily the result of an increased number of meetings
to accommodate attendance growth and growing product sales.
Marketing expenses were $21.0 million for the six months ended October 28, 2000,
an increase of 4.0% from $20.2 million for the six months ended October 23,
1999. As a percentage of revenue, marketing decreased from 11.5% to 10.3% for
the six months ended October 28, 2000.
<PAGE> 20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 19
Selling, general and administrative expenses increased 4.5% to 23.2 million for
the six months ended October 28, 2000 as compared to $22.2 million for the six
months ended October 23, 1999. As a percentage of revenue, selling, general and
administrative decreased from 12.6% to 11.3% for the six months ended October
28, 2000.
As a result of the above, operating income was $59.5 million for the six months
ended October 28, 2000, an increase of 31.6% from $45.2 million for the six
months ended October 23, 1999 (excluding a one-time charge of $8.3 million for
transaction costs and $1.8 million in revenue from discontinued food royalties).
Interest Expenses increased to $29.9 million for the six months ended October
28, 2000 from $6.5 million for the six months ended October 23, 1999 as a result
of borrowings related to the Transaction.
The effective income tax rate for the six months ended October 28, 2000 of 22.9%
decreased from 38.8% for the six months ended October 23, 1999 due to several
factors. The decrease was primarily due to the benefit of utilizing a net
operating loss carryforward to reduce the current U.S. tax provision, with
limited offset to the deferred provision due to the existence of a valuation
allowance against the projected realization of the deferred tax asset.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended October 28, 2000, the Company's primary source of funds
to meet working capital needs was cash from operations. Cash and cash
equivalents increased $11.8 million during the six months ended October 28,
2000. Cash flows provided by operating activities of $37.8 million funded net
cash flows used for investing activities of $11.9 million and financing
activities of $4.3 million.
Capital spending has averaged $2.9 million annually over the last three years
and has consisted primarily of leasehold improvements for meeting locations and
administrative offices, computer equipment for field staff and call centers and
Year 2000 upgrades. Capital expenditures for the six months ended October 28,
2000 was $1.4 million.
The Company is significantly leveraged. As of October 28, 2000, after reflecting
the repurchase of common stock and related borrowings, there was outstanding
$460.5 million in aggregate indebtedness, with approximately $30.0 million of
additional borrowing capacity available under the revolving credit facility. As
a result of the Transaction, the Company's liquidity requirements are
significantly increased primarily due to increased debt service obligations.
The Company believes that cash flows from operating activities, together with
borrowings available under the revolving credit facility, will be sufficient to
fund currently anticipated capital investment requirements, debt service
requirements and working capital requirements.
In addition, the Company has 1.0 million shares of Series A Preferred Stock
issued and outstanding. Holders of Series A Preferred Stock are entitled to
receive dividends at an annual rate of 6% payable annually in arrears.
<PAGE> 21
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 20
FORWARD-LOOKING STATEMENTS
The information contained in this report, other than historical information,
includes forward-looking statements including, in particular, the statements
about plans, strategies and prospects under the headings "Management's
Discussion and Analysis of Financial Condition and Results of Operation,"
"Industry" and "Business." Words such as "may," "will," "expect," "anticipate,"
"believe," "estimate," "plan," "intend" and similar expressions in this report
identify forward-looking statements. These forward-looking statements are based
on current views with respect to future events and financial performance. Actual
results could differ materially from those projected in the forward-looking
statements. These forward-looking statements are subject to risks, uncertainties
and assumptions, including, among other things:
- risks associated with the Company's ability to meet the Company's debt
obligations;
- risks associated with the relative success of marketing and advertising;
- risks associated with the continued attractiveness of the Company's diets;
- competition, including price competition and competition with self-help
weight loss and medical programs; and
- adverse results in litigation and regulatory matters, the adoption of
adverse legislation or regulations, more aggressive enforcement of existing
legislation or regulations or a change in the interpretation of existing
legislation or regulations.
<PAGE> 22
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 21
The Company is exposed to foreign currency fluctuations and interest rate
changes. Its exposure to market risk for changes in interest rates relates to
the fair value of long-term fixed rate debt and interest expense of variable
rate debt. The Company has historically managed interest rates through the use
of, and its long-term debt is currently composed of, a combination of fixed and
variable rate borrowings. Generally, the fair market value of fixed rate debt
will increase as interest rates fall and decrease as interest rates rise.
Based on the overall interest rate exposure on the Company's fixed rate
borrowings at October 28, 2000 a 10% change in market interest rates would have
less than a 5% impact on the fair value of the Company's long-term debt.
Other than intercompany transactions between its domestic and foreign entities
and the portion of the notes which are denominated in euro dollars, the Company
generally does not have significant transactions that are denominated in a
currency other than the functional currency applicable to each entity.
Fluctuations in currency exchange rates may also impact its stockholders'
deficit. The assets and liabilities of its non-U.S. subsidiaries are translated
into U.S. dollars at the exchange rates in effect at the balance sheet date.
Revenues and expenses are translated into U.S. dollars at the weighted average
exchange rate for period. The resulting translation adjustments are recorded in
stockholders' deficit as accumulated other comprehensive income (loss). In
addition, fluctuations in the value of the euro will cause the U.S. dollar
translated amounts to change in comparison to prior periods and may impact
interest expense. Furthermore, the Company translates the outstanding euro notes
at the end of each period into U.S. dollars, and the resulting change will be
reflected in the income statement of the corresponding period.
Each of its subsidiaries derives revenues and incurs expenses primarily within a
single country, and consequently, does not generally incur currency risks in
connection with the conduct of normal business operations.
The Company maintains foreign currency forward contracts denominated in the euro
and pounds sterling to more properly align the underlying sources of cash flow
with debt servicing requirements. At October 28, 2000, the Company had long-term
foreign currency forward contracts receivable with notional amounts of USD 44.0
million and EUR 76.0 million offset by foreign currency forward contracts
payable with notional amounts of GBP 59.2 million and USD 21.9 million.
The Company's ability to fund capital investment requirements, interest,
principal and dividend payment obligations and working capital requirements and
to comply with all of the financial covenants under its debt agreements depends
on the Company's future operations, performance and cash flow. These are subject
to prevailing economic conditions and to financial, business and other factors,
some of which are beyond its control.
<PAGE> 23
22
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Nothing to report under this item.
ITEM 2. CHANGES IN SECURITIES
Nothing to report under this item.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Nothing to report under this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Nothing to report under this item.
ITEM 5. OTHER INFORMATION
This report contains forward-looking statements regarding the Company's
future performance. These forward-looking statements are based on management's
views and assumptions, and involve unknown risks, uncertainties and other
important factors that could cause actual results to differ materially from
those expressed or implied in the forward-looking statement. These include, but
are not limited to, sales, earnings and volume growth, competitive conditions,
production costs, currency valuations, global economic and industry conditions,
and the other factors described in "Forward-Looking Statements" in the Company's
Form 10-K for the fiscal year ended April 29, 2000, as updated from time to time
by the Company in its subsequent filings with the SEC.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required to be furnished by Item 601 of Regulation S-K are
filed as part hereof. The paragraph numbers correspond to the exhibit numbers
designated in Item 601 of Regulations S-K.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended October
28, 2000.
<PAGE> 24
23
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Date: December 12, 2000
By: /s/ LINDA HUETT
--------------------------------------------
Linda Huett
President and Director
(Principal Executive Officer)
Date: December 12, 2000
By: /s/ THOMAS S. KIRITSIS
--------------------------------------------
Thomas S. Kiritsis
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE> 25
EXHIBIT INDEX
Exhibit
Number Description
*10.1 Agreement dated December 11, 2000, between Weighco Enterprises, Inc.,
Weighco of Northwest, Inc., Weighco of Southwest, Inc., Weight
Watchers North America and Weight Watchers International, Inc.
*10.2 Warrant Agreement & Warrant Certificate No. 02 dated October 1, 2000,
between WeightWatchers.com, Inc. and Weight Watchers International,
Inc.
*10.3 Collateral Assignment and Security Agreement dated October 1, 2000,
between WeightWatchers.com, Inc. and Weight Watchers International,
Inc.
