WeightWatchers 2011 Annual Report Download - page 29

China Joint Venture
On February 5, 2008, we entered into a joint venture with Danone Dairy Asia, or Danone Asia, an indirect,
wholly-owned subsidiary of Groupe DANONE S.A., to establish a weight management business in the People’s
Republic of China. Pursuant to the terms of the joint venture agreement, we and Danone Asia owned 51% and
49%, respectively, of the China Joint Venture. In September 2008, the China Joint Venture launched its first
weight management services centers. On April 27, 2011, we entered into a share purchase agreement with
Danone Asia, pursuant to which we acquired Danone Asia’s 49% minority equity interest in the China Joint
Venture as of that date. As a result of that acquisition, we now own 100% of the China Joint Venture and the
joint venture agreement with Danone Asia terminated in accordance with its terms.
Pending Tender Offer and Pending Share Repurchase
On February 23, 2012, we commenced a tender offer in which we are seeking to acquire up to $720 million of
our common stock at a price between $72.00 and $83.00 per share, a transaction that we refer to in this Annual
Report on Form 10-K as the Pending Tender Offer. Prior to the Pending Tender Offer, we entered into an agreement
with Artal Holdings whereby Artal Holdings agreed to sell to us, at the same price as was determined in the Pending
Tender Offer, the number of its shares of our common stock necessary to keep its current percentage ownership
interest in us at substantially the same level after the Pending Tender Offer, a transaction that we refer to in this
Annual Report on Form 10-K as the Pending Share Repurchase. Artal Holdings also agreed not to participate in the
Pending Tender Offer so that it would not affect the determination of the price in the Pending Tender Offer. The
Pending Tender Offer will expire at midnight, New York time, on March 22, 2012, unless we extend it. We have
reserved the right to purchase up to an additional 2% of our shares outstanding without amending or extending the
Pending Tender Offer. We expect to fund the purchases in the Pending Tender Offer and the Pending Share
Repurchase through new borrowings under an amended and extended version of our existing credit facilities that we
are currently negotiating. Shares of our common stock purchased pursuant to the Pending Tender Offer and the
Pending Share Repurchase will not reduce our existing repurchase program.
Regulation
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. Certain federal, state and
foreign agencies, such as the Federal Trade Commission, or FTC, regulate and enforce such laws relating to
advertising, disclosures to consumers, privacy, consumer pricing and billing arrangements, and other consumer
protection matters. 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. Laws
and regulations directly applicable to communications, operations or commerce over the Internet such as those
governing intellectual property, privacy, libel and taxation, are more prevalent and remain unsettled. Our
operations, particularly our WeightWatchers.com operations, are subject to these laws and regulations and we
continue to monitor their development and our compliance. In addition, we are subject to other laws and
regulations in the United States and internationally, including securities laws.
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 services and products.
Employees and Service Providers
As of December 31, 2011, we had approximately 28,000 employees. In addition, in certain of our markets,
our service providers are self-employed. As of December 31, 2011, we had approximately 56,000 employees and
service providers in the aggregate. We consider our relations with our employees and service providers to be
satisfactory.
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