WeightWatchers 2015 Annual Report Download - page 23

or regulatory proceeding, such actions and proceedings could result in substantial costs and may require that our
management devote substantial time and resources to defend us. For example, the previously disclosed adverse
UK tax ruling relating to the self-employment status of our UK leaders resulted in an aggregate adverse charge of
approximately $37.0 million.
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, licensees, franchisees, employees and other service providers, and government authorities in the
countries in which we operate.
Certain federal, state and foreign agencies, such as the FTC and FDA, regulate and enforce such laws and
regulations relating to advertising, promotions, packaging, privacy, consumer pricing and billing arrangements,
and other consumer protection matters. A determination by a federal, state or foreign agency, or a court in
connection with a governmental enforcement action or private litigation, that any of our practices do not meet
existing or new laws or regulations could result in liability, adverse publicity, and restrictions of our business
operations. For example, 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.
We are subject to many distinct employment, labor, commercial, benefits and tax laws and regulations in
each country in which we operate, including regulations affecting our employment and wage and hour practices
and our relations with our employees and service providers. If we are required to comply with new laws or
regulations or interpretations of existing laws and regulations that differ from our interpretations, are unable to
comply with these laws, regulations or interpretations, or are subject to litigation with respect to these laws,
regulations or interpretations, our business and results of operations could be adversely affected.
Laws and regulations directly applicable to communications, operations or commerce over the Internet such
as those governing intellectual property, privacy and taxation, are more prevalent and continue to evolve. If we
are required to comply with new laws or regulations or interpretations of existing laws or regulations that differ
from our interpretations, or if we are unable to comply with these laws, regulations or interpretations, our
business and results of operations could be adversely affected.
Future laws or regulations, including laws or regulations affecting our advertising and marketing practices,
consumer pricing and billing arrangements, relations with consumers, employees, service providers, licensees or
franchisees, or our services and products, may have an adverse impact on us.
If we do not maintain effective internal control over financial reporting, we could fail to report our
financial results accurately.
Effective internal control over financial reporting is necessary for us to provide reliable financial reports. In
the past we have discovered, and in the future we may discover, areas of our internal control over financial
reporting that need improvement. In the future, if we identify a control deficiency that rises to the level of a
material weakness in our internal controls over financial reporting, this material weakness may adversely affect
our ability to record, process, summarize and report financial information timely and accurately and, as a result,
our financial statements may contain material misstatements or omissions. A material weakness is defined as a
deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is
reasonable possibility that a material misstatement of the annual or interim financial statements will not be
prevented or detected on a timely basis.
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