WeightWatchers 2015 Annual Report Download - page 25

Item 2. Properties
We are currently headquartered in New York, New York in leased office space with our US back-office and
customer support operations located in leased office spaces elsewhere in the United States. Each of our foreign
country operations generally also has leased office space to support its operations. Our meetings are typically
held in third-party locations (usually meeting rooms in well-located civic or other community centers) or space
leased in retail centers.
Our website and digital products and services are hosted on hardware and software co-located at a third-
party facility in New York and by third-party cloud service providers with facilities in various locations around
the United States. We also maintain a disaster recovery site with hardware and software co-located at a third-
party facility in Arizona.
Item 3. Legal Proceedings
In re Weight Watchers International, Inc. Securities Litigation
In March 2014, two substantially identical putative class action complaints alleging violation of the federal
securities laws were filed by individual shareholders against the Company, certain of the Company’s current and
former officers and directors, and Artal Group, in the United States District Court for the Southern District of
New York. The complaints were purportedly filed on behalf of all purchasers of the Company’s common stock,
no par value per share, between February 14, 2012 and October 30, 2013, inclusive (referred to herein as the
Class Period). The complaints allege that, during the Class Period, the defendants disseminated materially false
and misleading statements and/or concealed material adverse facts. The complaints allege claims under Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder. The plaintiffs
seek to recover unspecified damages on behalf of the class members. In June 2014, the Court consolidated the
cases and appointed lead plaintiffs and lead counsel. On August 12, 2014, the plaintiffs filed an amended
complaint that, among other things, reduced the Class Period to between February 14, 2012 and February 13,
2013 and dropped all current officers and certain directors previously named as defendants. On October 14, 2014,
the defendants filed a motion to dismiss. The plaintiffs filed an opposition to the defendants’ motion to dismiss
on November 24, 2014 and the defendants filed a reply in support of their motion to dismiss on December 23,
2014. The Company continues to believe that the suits are without merit and intends to defend them vigorously.
Tracey Mead, Derivatively on Behalf of Weight Watchers International, Inc. vs. Artal Group et. al. and Weight
Watchers International, Inc.
On May 29, 2014 and June 23, 2014, the Company received shareholder litigation demand letters alleging
breaches of fiduciary duties and unjust enrichment by Company officers and directors and Artal, to the alleged
injury of the Company. The allegations in the letters relate to those contained in the ongoing federal securities
litigation described above. In response to the letters, pursuant to Virginia law, the Board of Directors has created
a special committee to review and evaluate the facts and circumstances surrounding the claims made in the
demand letters. The special committee has decided to undertake its review after receiving a decision on
defendants’ motion to dismiss in the federal securities litigation given the overlapping issues.
On August 11, 2015, a purported shareholder derivative lawsuit was filed in New York State Court in
Westchester County. The complaint alleges that certain Company directors and executive officers breached their
various fiduciary duties by knowingly causing the Company to repurchase shares from Artal and from certain
executive officers at artificially inflated prices in connection with a tender offer made to all shareholders. The
complaint seeks an order for the defendants to disgorge all profits made from selling Company stock between
March 16, 2012 and April 9, 2012, as well as an award for damages sustained by the alleged breaches of
fiduciary duty. The parties sought to stay this suit pending a decision on defendants’ motion to dismiss in the
federal securities litigation asserting similar allegations. The Court denied the stay, but at the preliminary court
conference on December 17, 2015, the Court granted an adjournment and scheduled the next court conference for
April 29, 2016. The Company believes that the suit is without merit and intends to defend it vigorously.
22