WeightWatchers 2010 Annual Report Download - page 35

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 th
e
committee’s
p
ur
p
ose and res
p
onsibilities and (4) the re
q
uirement for an annual
p
erformance 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.
O
ur art
i
cles o
fi
ncorporat
i
on and bylaws and V
i
rg
i
n
i
a corporate law conta
i
n prov
i
s
i
ons that may
d
i
scourage a takeover attempt.
Provisions contained in our articles of incorporation and b
y
laws and the laws of Vir
g
inia, the state in which
we are incorporated, could make it more difficult for a third part
y
to acquire us, even if doin
g
so mi
g
ht b
e
beneficial to our shareholders. Provisions of our articles of incorporation and b
y
laws impose various procedural
and other re
q
uirements, which could make it more difficult for shareholders to effect certain cor
p
orate actions
.
For example, our articles of incorporation authorize our Board of Directors to determine the ri
g
hts, preferences
,
p
rivile
g
es and restrictions of unissued series of preferred stock, without an
y
vote or action b
y
our shareholders.
Th
us, our Boar
d
o
f
D
i
rectors can aut
h
or
i
ze an
di
ssue s
h
ares o
f
pre
f
erre
d
stoc
k
w
i
t
h
vot
i
n
g
or convers
i
on r
igh
t
s
t
h
at cou
ld
a
d
verse
ly
a
ff
ect t
h
e vot
i
n
g
or ot
h
er r
igh
ts o
fh
o
ld
ers o
f
our common stoc
k
.T
h
ese r
igh
ts ma
yh
ave t
h
e
e
ff
ect o
fd
e
l
a
yi
n
g
or
d
eterr
i
n
g
ac
h
an
g
eo
f
contro
l
o
f
our compan
y
.Ina
ddi
t
i
on, a c
h
an
g
eo
f
contro
l
o
f
our
compan
y
ma
y
be dela
y
ed or deterred as a result of our havin
g
three classes of directors or as a result of the
shareholders’ ri
g
hts plan adopted b
y
our Board of Directors. These provisions could limit the price that certain
investors mi
g
ht be willin
g
to pa
y
in the future for shares of our common stock.
I
tem 1B. Unresolved
S
taff Comments
N
one.
I
tem 2. Pro
p
erties
We are current
l
y
h
ea
d
quartere
di
n New Yor
k
, New Yor
ki
n
l
ease
d
o
ffi
ce space w
i
t
h
our US
b
ac
k
-o
ffi
ce an
d
customer support operat
i
ons
l
ocate
di
n
l
ease
d
o
ffi
ce spaces e
l
sew
h
ere
i
nt
h
eUn
i
te
d
States. Eac
h
o
f
our
f
ore
i
g
n
country operat
i
ons genera
ll
ya
l
so
h
as
l
ease
d
o
ffi
ce space to support
i
ts operat
i
ons. Our WWI segment typ
i
ca
lly
h
o
ld
s
i
ts meet
i
ngs
i
nt
hi
r
d
-party
l
ocat
i
ons (usua
ll
y meet
i
ng rooms
i
nwe
ll
-
l
ocate
d
c
i
v
i
corot
h
er commun
i
ty
centers) or space
l
ease
di
n reta
il
centers.
I
tem 3. Legal Proceed
i
ngs
UK V
A
T Matter
I
n June 2008, the UK Court of Appeal issued a ruling that from April 1, 200
5
Weight Watchers meeting fees
in the United Kingdom were fully subject to 17.5% standard rated value added tax, or VAT, thus reversing in it
s
ent
i
rety an ear
li
er 2007
d
ec
i
s
i
on o
f
t
h
eUKF
i
rst T
i
er Tr
ib
una
l
(Tax C
h
am
b
er) (
f
ormer
l
y
k
nown as t
h
eUKVA
T
and Duties Tribunal), or the First Tier Tribunal, in our favor. For over a decade prior to April 1, 200
5
, Her
Ma
j
esty’s Revenue an
d
Customs, or HMRC,
h
a
dd
eterm
i
ne
d
t
h
at We
i
g
h
t Watc
h
ers meet
i
ng
f
ees
i
nt
h
eUn
i
te
d
Kingdom were only partially subject to 17.
5
% VAT. In light of the Court of Appeal’s ruling and in accordance
with accounting guidance for contingencies, we recorded a charge of approximately
$
32.5 million as an offset to
r
evenue
i
nt
h
e secon
d
quarter o
ffi
sca
l
2008
f
or UK VAT
li
a
bili
ty (
i
nc
l
u
di
ng
i
nterest)
i
n excess o
f
reserve
s
p
rev
i
ous
l
y recor
d
e
d
. Beg
i
nn
i
ng
i
nt
h
et
hi
r
d
quarter o
ffi
sca
l
2008,
i
n accor
d
ance w
i
t
h
account
i
ng gu
id
ance
f
o
r
cont
i
n
g
enc
i
es, we
h
ave recor
d
e
d
as an o
ff
set to revenue VAT c
h
ar
g
es assoc
i
ate
d
w
i
t
h
UK meet
i
n
gf
ees a
s
earne
d
, cons
i
stent w
i
t
h
t
h
e Court o
f
Appea
l
’s ru
li
n
g.
However, with respect to UK VAT owed for the period prior to Jul
y
1, 2005, HMRC failed to raise a notice
of
assessment w
i
t
hi
nt
h
e statutor
y
t
h
ree-
y
ear t
i
me per
i
o
d
.Ina
ddi
t
i
on, a
l
t
h
ou
gh
HMRC ra
i
se
d
not
i
ces o
f
19