WeightWatchers 2008 Annual Report Download - page 31

considering such “notice” laws. In addition, other public disclosure laws may require that material security
breaches be reported. If we experience a security breach and such notice or public disclosure is required in the
future, our reputation and our business may be harmed. Privacy concerns among prospective and existing
customers regarding our use of personal information collected on our websites or through our services and
products, such as weight management information, financial data, email addresses and home addresses, could
keep them from using our websites or purchasing our services or products. Industry-wide events or events with
respect to our websites, including misappropriation of third-party information, security breaches or changes in
industry standards, regulations or laws could deter people from using our websites or purchasing our offerings,
which could harm our business.
Disputes with our franchise operators could divert our management’s attention from their ordinary
responsibilities.
In the past, we have had disputes with our franchisees regarding operations and other contractual issues. For
example, we have had disputes with some of our franchisees regarding the interpretation of franchisee rights as
they relate to the Internet and mail-order products. Any future disputes could divert the attention of our
management from their ordinary responsibilities.
Our businesses are subject to legislative and regulatory restrictions.
A number of laws and regulations govern our advertising, services, products, operations and relations with
consumers, employees and other service providers in the countries in which we operate. The FTC and certain
state and foreign agencies regulate advertising, disclosures to consumers, privacy, consumer pricing or billing
arrangements, and other consumer matters.
During the mid-1990s, the FTC filed complaints against a number of commercial weight management
providers alleging violations of federal law in connection with the use of advertisements that featured
testimonials, claims for program success and program costs. In 1997, we entered into a consent order with the
FTC settling all contested issues raised in the complaint filed against us. The consent order requires us to comply
with certain procedures and disclosures in connection with our advertisements of products and services.
Since we operate our meetings business both in the United States and internationally, we are subject to
many distinct employment, labor, benefits and tax laws in each country in which we operate, including
regulations affecting our employment practices and our relations with our employees and service providers. If we
are required to comply with new regulations or new interpretations of existing regulations, or if we are unable to
comply with these regulations or interpretations, our business could be adversely affected.
Laws and regulations directly applicable to communications, operations or commerce over the Internet such
as those governing intellectual property, privacy, libel and taxation, are becoming more prevalent and remain
unsettled. If we are required to comply with new regulations or new interpretations of existing regulations, or if
we are unable to comply with these regulations or interpretations, our business could be adversely affected.
Future legislation or regulations, including legislation or regulations affecting our marketing and advertising
practices, relations with consumers or franchisees or our food and weight management services and products,
may have an adverse impact on us.
Our debt service obligations and the restrictions of our debt covenants could impede our operations and
flexibility.
Our financial performance could be affected by our level of debt. As of January 3, 2009, our total debt was
$1,647.5 million and we had additional availability under our revolving credit facility of $337.9 million. We
expect to generate the cash necessary to pay our expenses and to pay the principal and interest on all of our
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