WeightWatchers 2007 Annual Report Download - page 30

We are a “controlled company” within the meaning of the New York Stock Exchange rules and, as a
result, qualify for exemptions from certain corporate governance requirements.
Artal controls a majority of the voting power of our outstanding common stock. Under the NYSE rules, a
listed company of which more than 50% of the voting power is held by another person or group of persons acting
together is a “controlled company” and such a company may elect not to comply with certain NYSE corporate
governance requirements, including (1) the requirement that a majority of the Board of Directors consist of
independent directors, (2) the requirement that the nominating and corporate governance committee be composed
entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities,
(3) the requirement that the compensation committee be composed entirely of independent directors with a
written charter addressing the committee’s purpose and responsibilities and (4) the requirement for an annual
performance evaluation of the nominating and corporate governance and compensation committees. We have
elected to be treated as a “controlled company.” Accordingly, our shareholders may not have the same
protections afforded to shareholders of companies that are subject to all of the NYSE corporate governance
requirements.
Our articles of incorporation and bylaws and Virginia corporate law contain provisions that may
discourage a takeover attempt.
Provisions contained in our articles of incorporation and bylaws and the laws of Virginia, the state in which
we are incorporated, could make it more difficult for a third party to acquire us, even if doing so might be
beneficial to our shareholders. Provisions of our articles of incorporation and bylaws impose various procedural
and other requirements, which could make it more difficult for shareholders to effect certain corporate actions.
For example, our articles of incorporation authorize our Board of Directors to determine the rights, preferences,
privileges and restrictions of unissued series of preferred stock, without any vote or action by our shareholders.
Thus, our Board of Directors can authorize and issue shares of preferred stock with voting or conversion rights
that could adversely affect the voting or other rights of holders of our common stock. These rights may have the
effect of delaying or deterring a change of control of our company. In addition, a change of control of our
company may be delayed or deterred as a result of our having three classes of directors or as a result of the
shareholders’ rights plan adopted by our Board of Directors. These provisions could limit the price that certain
investors might be willing to pay in the future for shares of our common stock.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We are currently headquartered in New York, New York in leased office space. We also have small regional
offices within NACO, typically under short term leases. Each of our foreign country operations generally has
leased office space.
We typically hold our classes in third-party locations (typically meeting rooms in well-located civic or other
community organizations) or space leased in retail centers (typically leased spaces in strip malls for short terms,
generally less than five years). As of the end of fiscal 2007, there were approximately 5,300 North America
meeting locations, including approximately 4,500 third-party locations and 800 retail centers. In the U.K., there
were approximately 6,100 meeting locations, with 100% in third-party locations. In Continental Europe, there
were approximately 5,200 meeting locations, with approximately 99% in third-party locations. In Australia and
New Zealand, there were approximately 900 meeting locations, with approximately 96% in third-party locations.
Item 3. Legal Proceedings
On July 7, 2006, we filed an amended notice of appeal with the U.K. VAT and Duties Tribunal, or VAT
Tribunal, appealing a ruling by Her Majesty’s Revenue and Customs, or HMRC, that from April 1, 2005 Weight
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