(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of common stock outstanding as of ~~July~~October 31, 2012 was ~~55,624,134.~~55,652,763.


	June 30, 2012			December 31, 2011			September 29, 2012			December 31, 2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	90,902		$	47,469		$	80,591		$	47,469
Receivables, net		42,642			47,175			40,936			47,175
Inventories, net		40,362			53,437			40,173			53,437
Prepaid income taxes		15,526			3,071			7,958			3,071
Deferred income taxes		24,617			24,612			24,498			24,612
Prepaid expenses and other current assets		33,149			38,762			30,736			38,762

TOTAL CURRENT ASSETS		247,198			214,526			224,892			214,526

Property and equipment, net		55,730			41,072			62,253			41,072
Franchise rights acquired		764,599			764,026			782,886			764,026
Goodwill		50,013			50,012			51,218			50,012
Trademarks and other intangible assets, net		43,180			37,461			44,894			37,461
Deferred financing costs, net		29,565			8,720			28,460			8,720
Other noncurrent assets		3,293			5,811			3,353			5,811

TOTAL ASSETS	$	1,193,578		$	1,121,628		$	1,197,956		$	1,121,628


LIABILITIES AND TOTAL DEFICIT
CURRENT LIABILITIES
Portion of long-term debt due within one year	$	152,920		$	124,933		$	133,808		$	124,933
Accounts payable		48,961			60,810			50,811			60,810
Dividend payable		9,916			13,145			9,955			13,145
Derivative payable		19,203			24,613			17,009			24,613
UK self-employment liability		14,289			43,671			14,707			43,671
Accrued liabilities		149,449			140,573			166,687			140,573
Income taxes payable		0			2,704			1,511			2,704
Deferred revenue		112,330			83,758			104,125			83,758

TOTAL CURRENT LIABILITIES		507,068			494,207			498,613			494,207

Long-term debt		2,340,904			926,868			2,280,786			926,868
Deferred income taxes		118,497			100,723			127,342			100,723
Other		11,703			9,596			11,649			9,596

TOTAL LIABILITIES		2,978,172			1,531,394			2,918,390			1,531,394

TOTAL DEFICIT
Common stock, $0 par value; 1,000,000 shares authorized; 111,988 shares issued		0			0			0			0
Treasury stock, at cost, 56,395 shares at June 30, 2012 and 38,389 shares at December 31, 2011		(3,287,806	)		(1,793,983	)
Treasury stock, at cost, 56,334 shares at September 29, 2012 and 38,389 shares at December 31, 2011								(3,285,575	)		(1,793,983	)
Retained earnings		1,494,135			1,378,616			1,553,654			1,378,616
Accumulated other comprehensive income		9,077			5,601			11,487			5,601

TOTAL DEFICIT		(1,784,594	)		(409,766	)		(1,720,434	)		(409,766	)

TOTAL LIABILITIES AND TOTAL DEFICIT	$	1,193,578		$	1,121,628		$	1,197,956		$	1,121,628

The accompanying notes are an integral part of these consolidated financial statements.


	Three Months Ended				Six Months Ended					Three Months Ended					Nine Months Ended
	June 30, 2012		July 2, 2011		June 30, 2012		July 2, 2011			September 29, 2012			October 1, 2011		September 29, 2012		October 1, 2011
Meeting fees, net	$	248,498	$	269,586	$	501,006	$	538,498		$	223,209		$	233,400	$	724,215	$	771,898
Product sales and other, net		100,660		110,756		224,742		253,310			83,157			93,132		307,899		346,442
Internet revenues		135,594		105,671		262,539		197,636			124,244			101,902		386,783		299,538

Revenues, net		484,752		486,013		988,287		989,444			430,610			428,434		1,418,897		1,417,878

Cost of meetings, products and other		174,969		185,044		374,413		392,233			159,056			162,861		533,469		555,095
Cost of Internet revenues		16,259		13,819		31,985		26,920			15,721			14,390		47,706		41,309

Cost of revenues		191,228		198,863		406,398		419,153			174,777			177,251		581,175		596,404

Gross profit		293,524		287,150		581,889		570,291			255,833			251,183		837,722		821,474

Marketing expenses		83,777		75,150		214,095		170,815			65,886			61,514		279,981		232,329
Selling, general and administrative expenses		56,239		56,670		111,512		108,416			57,963			51,370		169,475		159,786

Operating income		153,508		155,330		256,282		291,060			131,984			138,299		388,266		429,359

Interest expense		23,757		15,012		36,924		33,185			23,225			13,655		60,149		46,840
Other expense (income), net		3,796		226		3,287		(245	)
Other (income) expense, net											(756	)		285		2,531		40
Early extinguishment of debt		0		0		1,328		0			0			0		1,328		0

Income before income taxes		125,955		140,092		214,743		258,120			109,515			124,359		324,258		382,479

Provision for income taxes		48,493		53,236		82,676		98,087			42,151			43,709		124,827		141,796

Net income		77,462		86,856		132,067		160,033			67,364			80,650		199,431		240,683
Net loss attributable to the noncontrolling interest		0		107		0		523			0			0		0		523

Net income attributable to Weight Watchers International, Inc.	$	77,462	$	86,963	$	132,067	$	160,556		$	67,364		$	80,650	$	199,431	$	241,206


Earnings per share attributable to Weight Watchers International, Inc.
Basic	$	1.37	$	1.19	$	2.03	$	2.20		$	1.21		$	1.10	$	3.23	$	3.29

Diluted	$	1.36	$	1.17	$	2.01	$	2.17		$	1.20		$	1.09	$	3.19	$	3.26

Weighted average common shares outstanding
Basic		56,505		73,311		64,924		73,115			55,635			73,567		61,828		73,265

Diluted		57,141		74,353		65,653		74,093			56,122			74,263		62,486		74,040

Dividends declared per common share	$	0.18	$	0.18	$	0.35	$	0.35		$	0.18		$	0.18	$	0.53	$	0.53

The accompanying notes are an integral part of these consolidated financial statements.


												Three Months Ended					Nine Months Ended
	Three Months Ended						Six Months Ended					September 29,		October 1,			September 29,		October 1,
	June 30, 2012			July 2, 2011			June 30, 2012			July 2, 2011		2012		2011			2012		2011
Net income	$	77,462		$	86,856		$	132,067		$	160,033	$	67,364	$	80,650		$	199,431	$	240,683
Other comprehensive income:
Foreign currency translation adjustments, net of tax^(a)		(437	)		1,759			(225	)		2,875		1,243		(6,014	)		1,018		(3,139	)
Current period changes in fair value of derivatives, net of tax^(b)		1,897			(996	)		3,699			5,490		1,167		1,021			4,866		6,511

Total other comprehensive income		1,460			763			3,474			8,365		2,410		(4,993	)		5,884		3,372

Comprehensive income		78,922			87,619			135,541			168,398		69,774		75,657			205,315		244,055
Comprehensive loss attributable to the noncontrolling interest		0			107			0			523		0		0			0		523

Comprehensive income attributable to Weight Watchers International, Inc.	$	78,922		$	87,726		$	135,541		$	168,921	$	69,774	$	75,657		$	205,315	$	244,578

The accompanying notes are an integral part of these consolidated financial statements.


	Six Months Ended						Nine Months Ended
							September 29, 2012			October 1, 2011
Operating activities:
Net income							$	199,431		$	240,683
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization								26,681			22,818
Amortization of deferred financing costs								5,178			3,730
Share-based compensation expense								5,905			6,456
Deferred tax provision								22,621			23,935
Allowance for doubtful accounts								(430	)		1,606
Reserve for inventory obsolescence, other								8,245			10,771
Foreign currency exchange rate gain								(189	)		(622	)
Loss on disposal of assets								574			500
Loss on investment								2,697			735
Early extinguishment of debt								1,328			0
Other items, net								0			(631	)
Changes in cash due to:
Receivables								7,003			4,739
Inventories								6,710			(7,040	)
Prepaid expenses								2,834			14,172
Accounts payable								(10,173	)		(9,803	)
UK self-employment liability								(30,018	)		2,931
Accrued liabilities								34,646			37,115
Deferred revenue								19,870			29,899
Income taxes								(1,748	)		(7,046	)
	June 30, 2012			July 2, 2011
Cash provided by operating activities	$	180,278		$	254,983			301,165			374,948


Investing activities:
Capital expenditures		(25,820	)		(8,787	)		(35,585	)		(12,950	)
Capitalized software expenditures		(12,249	)		(11,281	)		(18,955	)		(17,526	)
Cash paid for acquisition								(17,000	)		0
Other items, net		(184	)		(331	)		(81	)		(544	)

Cash used for investing activities		(38,253	)		(20,399	)		(71,621	)		(31,020	)


Financing activities:
Proceeds from new term loans		1,449,400			0			1,449,397			0
Payments of long-term debt		(7,376	)		(202,322	)
Payments on long-term debt								(86,603	)		(298,285	)
Payment of dividends		(22,735	)		(25,872	)		(32,465	)		(38,745	)
Payments to acquire treasury stock		(1,504,074	)		(34,924	)		(1,504,208	)		(34,924	)
Deferred financing costs		(25,406	)		0			(25,542	)		0
Proceeds from stock options exercised		9,399			41,112			10,863			41,428
Tax benefit from restricted stock units vested and stock options exercised		2,595			4,996
Tax benefit of restricted stock units vested and stock options exercised								3,021			6,617

Cash used for financing activities		(98,197	)		(217,010	)		(185,537	)		(323,909	)


Effect of exchange rate changes on cash and cash equivalents and other		(395	)		2,274			(10,885	)		868

Net increase in cash and cash equivalents		43,433			19,848			33,122			20,887
Cash and cash equivalents, beginning of period		47,469			40,534			47,469			40,534

Cash and cash equivalents, end of period	$	90,902		$	60,382		$	80,591		$	61,421

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying consolidated financial statements include the accounts of Weight Watchers International, Inc. and all of its subsidiaries. The term “Company” as used throughout these notes is used to indicate Weight Watchers International, Inc. and all of its businesses consolidated for purposes of its financial statements. The term “WWI” as used throughout these notes is used to indicate Weight Watchers International, Inc. and all of the Company’s businesses other than WW.com. The term “WW.com” as used throughout these notes is used to indicate WeightWatchers.com, Inc. and all of the Company’s Internet-based businesses.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include amounts that are based on management’s best estimates and judgments. While all available information has been considered, actual amounts could differ from those estimates. The consolidated financial statements are unaudited but, in the opinion of management, reflect all adjustments including those of a normal recurring nature necessary for a fair statement of the interim results presented.

As further discussed in Note 3, effective with its formation in February 2008, the Company consolidated the financial statements of Weight Watchers Danone China Limited.

These statements should be read in conjunction with the Company’s Annual Report on Form 10-K for fiscal 2011, which includes additional information about the Company, its results of operations, its financial position and its cash flows.

In ~~September 2011,~~July 2012, the Financial Accounting Standards Board (the “FASB”) issued updated guidance on the periodic testing of indefinite-lived intangible assets for impairment. This guidance allows companies to first assess qualitative factors to determine if it is more-likely-than-not that an indefinite-lived intangible asset might be impaired and whether it is necessary to perform the quantitative impairment test required under current accounting standards. This guidance is applicable for fiscal years beginning after September 15, 2012, with early adoption permitted. The Company adopted the provisions of this guidance in the third quarter of fiscal 2012. The adoption of this guidance did not have any affect on the consolidated financial position, results of operations or cash flows of the Company.

In September 2011, the FASB issued updated guidance on the periodic testing of goodwill for impairment. This guidance allows companies to assess qualitative factors to determine if it is more-likely-than-not that goodwill might be impaired and whether it is necessary to perform the two-step goodwill impairment test required under current accounting standards. This guidance is applicable for fiscal years beginning after December 15, 2011, with early adoption permitted. The Company adopted the provisions of this guidance in the first quarter of fiscal 2012. The adoption of this guidance did not have ~~a material effect~~any affect on the consolidated financial position, results of operations or cash flows of the Company.

In June 2011, the FASB issued authoritative guidance requiring companies to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The provisions of the guidance are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. In December 2011, the FASB issued an amendment deferring the effective date for the presentation of reclassification adjustments out of accumulated other comprehensive income. The Company adopted the provisions of this guidance in the first quarter of fiscal 2012, and such adoption did not affect the consolidated financial position, results of operations or cash flows of the Company.

In May 2011, the FASB issued authoritative fair value guidance entitled “Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and

IFRSs”. Some of the amendments included in the guidance clarify the FASB’s intent about the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. This guidance is effective for interim and annual periods beginning after December 15, 2011. The Company adopted the provisions of this guidance in the first quarter of fiscal 2012, and such adoption did not have a material impact on the disclosures in its consolidated financial statements.

Certain prior year amounts have been reclassified to conform to the current period presentation.

For a discussion of the Company’s other significant accounting policies, see “Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements of the Company’s Annual Report on Form 10-K for fiscal 2011.

The acquisitions of franchisees have been accounted for under the purchase method of accounting and, accordingly, earnings of acquired franchisees have been included in the consolidated operating results of the Company since the applicable date of acquisition. ~~There have~~During the third quarter of fiscal 2012, the Company acquired certain assets of its franchisee as outlined below. Prior to this purchase, there had been no key franchise acquisitions since fiscal 2008.

On September 10, 2012, the Company acquired substantially all of the assets of its Southeastern Ontario and Ottawa, Canada franchisee, Slengora Limited, for a net purchase price of $17,000. The total purchase price has been preliminarily allocated to franchise rights acquired ($15,263), goodwill ($1,199), customer relationship value ($322), fixed assets ($121), inventory ($71) and prepaid expenses and other current assets ($24). Due to the timing of this acquisition, the purchase price allocation has not yet been finalized.

The effect of this franchise acquisition was not material to the Company’s consolidated financial position, results of operations, or operating cash flows in the periods presented.

On February 5, 2008, Weight Watchers Asia Holdings Ltd. (“Weight Watchers Asia”), a direct, wholly-owned subsidiary of the Company, and Danone Dairy Asia (“Danone Asia”), an indirect, wholly-owned subsidiary of Groupe DANONE S.A., entered into a joint venture agreement to establish a weight management business in the People’s Republic of China. Pursuant to the terms of the joint venture agreement, Weight Watchers Asia and Danone Asia owned 51% and 49%, respectively, of the joint venture entity, Weight Watchers Danone China Limited (together with all of its businesses, the “China Joint Venture”). Because the Company had a direct controlling financial interest in the China Joint Venture, it consolidated the entity from the first quarter of fiscal 2008.

On April 27, 2011, Weight Watchers Asia entered into a share purchase agreement with Danone Asia, pursuant to which Weight Watchers Asia acquired Danone Asia’s 49% minority equity interest in the China Joint Venture as of that date for consideration of $1. Effective April 27, 2011, the date of the acquisition of Danone Asia’s minority equity interest by Weight Watchers Asia, the Company owns 100% of the China Joint Venture and no longer accounts for a non-controlling interest in the China Joint Venture. The noncontrolling interest that had been reflected on the Company’s balance sheet was reclassified to retained earnings.

For the ~~six~~nine months ended ~~June 30,~~September 29, 2012, the change in goodwill was due to foreign currency fluctuations. The Company’s goodwill by reportable segment at ~~June 30,~~September 29, 2012 was ~~$23,813~~$25,018 related to its WWI segment and $26,200 related to its WW.com segment. Franchise rights acquired are due to acquisitions of the Company’s franchised territories. For the six months ended June 30, 2012, the change in franchise rights acquired was due to foreign currency fluctuations.

Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of $4,139 and $8,468 for the three and six months ended June 30, 2012, respectively. Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of $3,992 and $7,848 for the three and six months ended July 2, 2011, respectively.

WWI segment and $26,200 related to its WW.com segment. Franchise rights acquired are due to acquisitions of the Company’s franchised territories. For the nine months ended September 29, 2012, the change in franchise rights acquired was due to the Company’s acquisition of its Southeastern Ontario and Ottawa, Canada franchisee, as well as foreign currency fluctuations.

Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of $4,323 and $12,791 for the three and nine months ended September 29, 2012, respectively. Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of $4,313 and $12,161 for the three and nine months ended October 1, 2011, respectively.

The carrying amount of finite-lived intangible assets as of ~~June 30,~~September 29, 2012 and December 31, 2011 was as follows:


	June 30, 2012				December 31, 2011				September 29, 2012				December 31, 2011
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Capitalized software costs	$	75,260	$	48,677	$	67,223	$	44,003	$	77,677	$	51,231	$	67,223	$	44,003
Trademarks		10,108		9,440		10,006		9,276		10,178		9,525		10,006		9,276
Website development costs		49,921		34,368		43,987		30,747		53,726		36,292		43,987		30,747
Other		7,033		6,657		7,033		6,762		7,035		6,674		7,033		6,762

	$	142,322	$	99,142	$	128,249	$	90,788	$	148,616	$	103,722	$	128,249	$	90,788

Estimated amortization expense of existing finite-lived intangible assets for the next five fiscal years is as follows:


Remainder of fiscal 2012	$	8,342	$	4,172
Fiscal 2013	$	15,620	$	17,394
Fiscal 2014	$	11,575	$	13,470
Fiscal 2015	$	5,668	$	7,336
Fiscal 2016	$	1,867	$	2,407


	June 30, 2012					December 31, 2011					September 29, 2012					December 31, 2011
	Balance		Effective Rate			Balance		Effective Rate			Balance		Effective Rate			Balance		Effective Rate
Revolver A-1 Loan due June 30, 2014	$	8,711		2.61	%	$	0		0.00	%
Revolver A-2 Loan due March 15, 2017		32,289		2.39	%		0		0.00	%
Term A-1 Loan due January 26, 2013		76,452		1.48	%		148,749		1.30	%	$	57,339		1.51	%	$	148,749		1.30	%
Term B Loan due January 26, 2014		130,132		1.88	%		238,125		1.65	%		129,789		1.91	%		238,125		1.65	%
Term C Loan due June 30, 2015		117,014		2.74	%		426,075		2.55	%		115,411		2.74	%		426,075		2.55	%
Term D Loan due June 30, 2016		118,821		2.83	%		238,852		2.56	%		118,519		2.81	%		238,852		2.56	%
Term E Loan due March 15, 2017		1,184,257		2.63	%		0		0.00	%		1,169,453		2.53	%		0		0.00	%
Term F Loan due March 15, 2019		826,148		3.88	%		0		0.00	%		824,083		3.88	%		0		0.00	%

Total Debt		2,493,824		2.84	%		1,051,801		2.15	%		2,414,594		2.87	%		1,051,801		2.15	%
Less Current Portion		152,920					124,933					133,808					124,933

Total Long-Term Debt	$	2,340,904				$	926,868				$	2,280,786				$	926,868

The Company’s credit facilities consist of certain term loan facilities and revolving credit facilities (collectively, the “WWI Credit Facility”). During the first quarter of fiscal 2012, the composition of the WWI Credit Facility changed as a result of the Company amending and restating the WWI Credit Facility to, among other things, extend the maturity of certain of the Company’s term loan facilities and the revolving credit facility and to obtain new commitments for the borrowing of an additional $1,449,397 of term loans to finance the purchases of shares of the Company’s common stock in the Tender Offer and from Artal Holdings pursuant to the Purchase Agreement (each as defined below in Note 6).

Immediately prior to the amendment of the WWI Credit Facility, the term loan facilities consisted of a tranche A-1 loan (“Term A-1 Loan”), a tranche B loan (“Term B Loan”), a tranche C loan (“Term C Loan”), and a tranche D loan (“Term D Loan”), and a revolving credit facility (“Revolver A-1”). The aggregate principal amount then outstanding under (i) the Term A-1 Loan was $128,648, (ii) the Term B Loan was $237,500, (iii) the Term C Loan was $420,394 and (iv) the Term D Loan was $238,247. Immediately prior to the amendment of the WWI Credit Facility, the Revolver A-1 had no loans outstanding under it, $1,027 of issued but undrawn letters of credit and $331,620 in available unused commitments thereunder.

Following the amendment of the WWI Credit Facility on March 15, 2012, (i) $33,083 in aggregate principal amount of the Term A-1 Loan and $301,777 in aggregate principal amount of the Term C Loan were converted into, and $849,397 in aggregate principal amount of commitments to borrow new term loans were provided under, a new tranche E loan (“Term E Loan”), (ii) $107,025 in aggregate principal amount of the Term B Loan and $119,123 in aggregate principal amount of the Term D Loan were converted into, and $600,000 in aggregate principal amount of commitments to borrow new term loans were provided under, a new tranche F loan (“Term F Loan”), and (iii) $261,971 in aggregate principal amount of commitments under the Revolver A-1 were converted into a new revolving credit facility (“Revolver A-2”). The loans outstanding under each term loan facility existing prior to the amendment of the WWI Credit Facility and the loans and commitments outstanding under the Revolver A-1, in each case that were not converted into the Term E Loan, the Term F Loan or the Revolver A-2, as applicable, continued to remain outstanding under the WWI Credit Facility as the Term A-1 Loan, the Term B Loan, the Term C Loan, the Term D Loan or the Revolver A-1, as applicable. In connection with this amendment, the Company incurred fees of $25,425 during the first quarter of fiscal 2012. On March 27, 2012, the Company borrowed an aggregate of $726,000 under the Term E Loan and the Term F Loan to finance the purchase of shares in the Tender Offer and to pay a portion of the related fees and expenses. On April 9, 2012, the Company borrowed an aggregate of approximately $723,397 under the Term E Loan to finance the purchase of shares from Artal Holdings. At ~~June 30,~~September 29, 2012, the Company had ~~$2,493,824~~$2,414,594 outstanding under the WWI Credit Facility, ~~a combination~~consisting entirely of term loans and ~~amounts~~there were no loans outstanding under any of the ~~Revolver A-1 and the Revolver A-2.~~revolving credit facilities. In addition, at ~~June 30,~~September 29, 2012, the Revolver A-1 had ~~$218~~$186 in issued but undrawn letters of credit outstanding thereunder and ~~$61,747~~$70,490 in available unused commitments thereunder and the Revolver A-2 had ~~$809~~$691 in issued but undrawn letters of credit outstanding thereunder and ~~$228,873~~$261,280 in available unused commitments thereunder.

At ~~June 30,~~September 29, 2012 and December 31, 2011, the Company’s debt consisted entirely of variable-rate instruments. Interest rate swaps were entered into to hedge a portion of the cash flow exposure associated with the Company’s variable-rate borrowings. The average interest rate on the Company’s debt, exclusive of the impact of swaps, was approximately ~~2.88%~~3.01% and 2.40% per annum at ~~June 30,~~September 29, 2012 and December 31, 2011, respectively.

The WWI Credit Facility provides that term loans and the loans outstanding under the Revolver A-1 and the Revolver A-2 bear interest at a rate per annum equal to either, at the Company’s option, the LIBO Rate (Reserve Adjusted) (as defined in the WWI Credit Facility agreement) plus an applicable margin or the Alternate Base Rate (as defined in the WWI Credit Facility agreement) plus an applicable margin, which applicable margins will vary depending on the Company’s Net Debt to EBITDA Ratio (as defined in the WWI Credit Facility agreement) from time to time in effect. At ~~June 30,~~September 29, 2012, the Term A-1 Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus ~~1.00%~~1.25% per annum; the Term B Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus 1.50% per annum; the Term C Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted)

plus 2.25% per annum; the Term D Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus 2.25% per annum; the Term E Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus ~~2.00%~~2.25% per annum; the Term F Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus ~~2.75%~~3.00% per annum; had any loans under the Revolver A-1 ~~bore~~been outstanding, they would have borne interest at a rate equal to LIBO Rate (Reserve Adjusted) plus 2.50% per annum; and had any loans under the Revolver A-2 ~~bore~~been outstanding, they would have borne interest at a rate equal to LIBO Rate (Reserve Adjusted) plus ~~2.00%~~2.25% per annum. For purposes of calculating the interest rate on the Term F Loan, the LIBO Rate (Reserve Adjusted) will always be at least 1.00% per annum. In addition to paying interest on outstanding principal under the WWI Credit Facility, the Company is required to pay an undrawn commitment fee to the lenders under each of the Revolver A-1 and the Revolver A-2 with respect to the unused commitments under each such facility at a rate that is dependent on the Company’s Net Debt to EBITDA Ratio from time to time in effect. As of ~~June 30,~~September 29, 2012, the applicable commitment fee rate for the Revolver A-1 was 0.50% per annum and for the Revolver A-2 was 0.40% per annum.

The WWI Credit Facility contains customary covenants including covenants that, in certain circumstances, restrict the Company’s ability to incur additional indebtedness, pay dividends on and redeem capital stock, make other payments, including investments, sell its assets and enter into consolidations, mergers and transfers of all or substantially all of its assets. The WWI Credit Facility also requires the Company to maintain specified financial ratios and satisfy certain financial condition tests. At ~~June 30,~~September 29, 2012, the Company was in compliance with all of the required financial ratios and also met all of the financial condition tests, and expects to continue to do so for the foreseeable future. The WWI Credit Facility contains customary events of default. Upon the occurrence of an event of default under the WWI Credit Facility, the lenders thereunder may cease making loans and declare amounts outstanding to be immediately due and payable. The WWI Credit Facility is guaranteed by certain of the Company’s existing and future subsidiaries. Substantially all of the Company’s assets secure the WWI Credit Facility.

The WWI Credit Facility allows the Company to make loan modification offers to all lenders of any tranche of term loans or revolving commitments to extend the maturity date of such loans and/or commitments and/or reduce or eliminate the scheduled amortization. Any such loan modifications would be effective only with respect to such tranche of term loans or revolving commitments and only with respect to those lenders that accept the Company’s offer. Loan modification offers may be accompanied by increased pricing and/or fees payable to accepting lenders. The WWI Credit Facility also allows for up to an additional $400,000 of incremental financing through the creation of either new tranches of term loans or through an increase in commitments under the Revolver A-2, in each case to be provided to the Company under the WWI Credit Facility. The incremental capacity is uncommitted and the Company must find lenders to provide any such financing prior to incurrence. In addition, the Company may incur up to an additional $200,000 of incremental term loans through the creation of a new tranche of term loans, provided that the aggregate principal amount of such new term loans cannot exceed the amount then outstanding under its existing revolving credit facilities and the proceeds from such new tranche of term loans must be used solely to repay certain outstanding revolving loans and permanently reduce the commitments of certain revolving lenders.

On February 23, 2012, the Company commenced a “modified Dutch auction” tender offer for up to $720,000 in value of its common stock at a purchase price not less than $72.00 and not greater than $83.00 per share (the “Tender Offer”). Prior to the Tender Offer, on February 14, 2012, the Company entered into an agreement (the “Purchase Agreement”) with Artal Holdings Sp. z o.o., Succursale de Luxembourg (“Artal Holdings”) whereby Artal Holdings agreed to sell to the Company, at the same price as was determined in the Tender Offer, such number of its shares of the Company’s common stock that, upon the closing of this purchase after the completion of the Tender Offer, Artal Holdings’ percentage ownership in the outstanding shares of the Company’s common stock would be substantially equal to its level prior to the Tender Offer. Artal Holdings also agreed not to participate in the Tender Offer so that it would not affect the determination of the purchase price of the shares in the Tender Offer.

The Tender Offer expired at midnight, New York time, on March 22, 2012, and on March 28, 2012 the Company repurchased 8,780 shares at a purchase price of $82.00 per share. On April 9, 2012, the Company repurchased 9,499 of Artal Holdings’ shares at a purchase price of $82.00 per share pursuant to the Purchase Agreement. In March 2012, the Company amended and extended the WWI Credit Facility to finance these repurchases. See Note 5.

On October 9, 2003, the Company’s Board of Directors authorized and the Company announced a program to repurchase up to $250,000 of the Company’s outstanding common stock. On each of June 13, 2005, May 25, 2006 and October 21, 2010, the Company’s Board of Directors authorized and the Company announced adding $250,000 to the program. The repurchase program allows for shares to be purchased from time to time in the open market or through privately negotiated transactions. No shares will be purchased from Artal Holdings and its parents and subsidiaries under the program. The repurchase program currently has no expiration date.

During the ~~six~~nine months ended ~~June 30,~~September 29, 2012, the Company purchased no shares of its common stock in the open market under the repurchase program. During the ~~six~~nine months ended ~~July 2,~~October 1, 2011, the Company purchased 814 shares of its common stock in the open market under the repurchase program for a total cost of $31,550. The repurchase of shares of common stock under the Tender Offer and from Artal Holdings pursuant to the Purchase Agreement was not made pursuant to the Company’s existing repurchase program.

Basic earnings per share (“EPS”) are calculated utilizing the weighted average number of common shares outstanding during the periods presented. Diluted EPS is calculated utilizing the weighted average number of common shares outstanding during the periods presented adjusted for the effect of dilutive common stock equivalents.


	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	June 30, 2012		July 2, 2011		June 30, 2012		July 2, 2011		September 29, 2012		October 1, 2011		September 29, 2012		October 1, 2011
Numerator:
Net income attributable to Weight Watchers International, Inc.	$	77,462	$	86,963	$	132,067	$	160,556	$	67,364	$	80,650	$	199,431	$	241,206

Denominator:
Weighted average shares of common stock outstanding		56,505		73,311		64,924		73,115		55,635		73,567		61,828		73,265
Effect of dilutive common stock equivalents		636		1,042		729		978		487		696		658		775

Weighted average diluted common shares outstanding		57,141		74,353		65,653		74,093		56,122		74,263		62,486		74,040

EPS attributable to Weight Watchers International, Inc.:
EPS attributable to
Weight Watchers International, Inc.:
Basic	$	1.37	$	1.19	$	2.03	$	2.20	$	1.21	$	1.10	$	3.23	$	3.29

Diluted	$	1.36	$	1.17	$	2.01	$	2.17	$	1.20	$	1.09	$	3.19	$	3.26

The number of anti-dilutive common stock equivalents excluded from the calculation of weighted average shares for diluted EPS was ~~468~~766 and ~~213~~234 for the three months ended ~~June 30,~~September 29, 2012 and ~~July 2,~~October 1, 2011, respectively, and ~~389~~462 and ~~130~~165 for the ~~six~~nine months ended ~~June 30,~~September 29, 2012 and ~~July 2,~~October 1, 2011, respectively.

On May 6, 2008, May 12, 2004 and December 16, 1999, respectively, the Company’s shareholders approved the 2008 Stock Incentive Plan (the “2008 Plan”), the 2004 Stock Incentive Plan (the “2004 Plan”) and the 1999 Stock Purchase and Option Plan (the “1999 Plan” and together with the 2008 Plan and the 2004 Plan, the “Stock Plans”). These plans are designed to promote the long-term financial interests and growth of the Company by attracting, motivating and retaining employees with the ability to contribute to the success of the business and to align compensation for the Company’s employees over a multi-year period directly with the interests of the shareholders of the Company. The Company’s Board of Directors or a committee thereof administers the Stock Plans.

The effective tax rate for the three and ~~six~~nine months ended ~~June 30,~~September 29, 2012 was 38.5%. The effective tax ~~rate~~rates for the three and ~~six~~nine months ended ~~July 2,~~October 1, 2011 ~~was 38.0%.~~were 35.1% and 37.1%, respectively. For the three and ~~six~~nine months ended ~~June 30,~~September 29, 2012, the primary differences between the US federal statutory tax rate and the Company’s effective tax rate were state income taxes and increases in valuation allowances, offset by lower rates in certain foreign ~~jurisdictions.~~jurisdictions and the reversal of certain tax reserves due to the expiration of the applicable statutes of limitations. For the three and ~~six~~nine months ended ~~July 2,~~October 1, 2011, the primary differences between the US federal statutory tax rate and the Company’s effective tax rate were state income taxes and increases in valuation allowances, offset by lower rates in certain foreign jurisdictions, and the reversal of certain tax reserves due to the expiration of the applicable statutes of ~~limitations.~~limitations and the US tax benefit associated with losses due to the closing of the Company’s Finland business.

In July 2007, Her Majesty’s Revenue and Customs (“HMRC”) issued to the Company notices of determination and decisions that, for the period April 2001 to April 2007, its leaders and certain other service providers in the United Kingdom should have been classified as employees for tax purposes and, as such, the Company should have withheld tax from the leaders and certain other service providers pursuant to the “Pay As You Earn” (“PAYE”) and national insurance contributions (“NIC”) collection rules and remitted such amounts to HMRC. HMRC also issued a claim to the Company in October 2008 in respect of NIC which corresponds to the prior notices of assessment with respect to PAYE previously raised by HMRC.

In September 2007, the Company appealed to the UK First Tier Tribunal (Tax Chamber) (formerly known as the UK VAT and Duties Tribunal and hereinafter referred to as the “First Tier Tribunal”) HMRC’s notices as to these classifications and against any amount of PAYE and NIC liability claimed to be owed by the Company. In February 2010, the First Tier Tribunal issued a ruling that the Company’s UK leaders should have been classified as employees for UK tax purposes and, as such, the Company should have withheld tax from its leaders pursuant to the PAYE and NIC collection rules for the period from April 2001 to April 2007 with respect to services performed by the leaders for the Company. The Company appealed the First Tier Tribunal’s adverse ruling to the UK Upper Tribunal (Tax and Chancery Chamber) (the “Upper Tribunal”), and in October 2011, the Upper Tribunal issued a ruling dismissing the Company’s appeal. In January 2012, the Company sought permission from the UK Court of Appeal to appeal the Upper Tribunal’s ruling, which the UK Court of Appeal refused in March 2012. In March 2012, the Company applied to the UK Court of Appeal for an oral hearing to seek permission to appeal to the UK Court of Appeal against the Upper Tribunal’s ruling. At the hearing in June 2012, the UK Court of Appeal granted the Company permission to appeal. A hearing date for the appeal has ~~not yet~~ been ~~set.~~set for January 2013.

what it had claimed for the period April 2001 to April 2007. The Company is currently appealing this PAYE claim with the First Tier Tribunal and the First Tier Tribunal has directed that the appeal be stayed until following the decision of the UK Court of Appeal with respect to the Company’s appeal of the Upper Tribunal’s ruling.

In light of the First Tier Tribunal’s adverse ruling and in accordance with accounting guidance for contingencies, the Company recorded in the fourth quarter of fiscal 2009 a reserve for the period from April 2001 through the end of fiscal 2009, inclusive of estimated accrued interest. On a quarterly basis, beginning in the first quarter of fiscal 2010 and through the second quarter of fiscal 2011, the Company recorded a reserve for UK withholding taxes with respect to its UK leaders consistent with this ruling. The reserve at the end of the second quarter of fiscal 2011 equaled approximately $43,671 in the aggregate based on the exchange rates at the end of fiscal 2011. As of the beginning of the third quarter of fiscal 2011, the Company ~~employs~~began employing its UK leaders and therefore has ceased recording any further reserves for this matter. In addition, the Company does not currently

expect additional reserves will be required in connection with the December 2011 amended NIC claim and the February 2012 PAYE claim by HMRC, as reserves had previously been made for these amounts. In February 2012, the Company paid HMRC, on a without prejudice basis, a portion of the amount previously reserved equal to approximately $30,018 based on the exchange rates at the payment date for estimated amounts claimed to be owed by the Company with respect to PAYE and interest thereon for the period April 2001 to July 2011. The reserve at the end of the ~~second~~third quarter of fiscal 2012 equaled approximately ~~$14,289~~$14,707 in the aggregate based on the exchange rates at the end of the ~~second~~third quarter of fiscal 2012.

~~Hanson-Kelly & Jackson v. Weight Watchers North America, Inc.~~ Although the Company disagrees with the First Tier Tribunal’s adverse ruling and ~~Weight Watchers International, Inc.~~

~~In January 2010,~~believes it has valid grounds to obtain a ~~lawsuit was filed~~reversal on appeal, the Company is currently in ~~the U.S. District Court for the Middle District of North Carolina by two leaders alleging violations of certain federal and North Carolina wage and hour laws on behalf of themselves, and,~~discussions with HMRC to determine if ~~approved by the court, other leaders and receptionists in North Carolina since January 25, 2007. In~~ this matter can be settled prior to the plaintiffs sought unpaid wages and certain other damages. In April 2010, the Company filed a Motion to Dismiss the claim for unpaid wages under the North Carolina wage and hour laws. In February 2012, the parties engaged in mediation and reached an agreement in principle to resolve the case for a de minimis amount. The court approved the settlement agreement negotiated by the parties, and the case was dismissed with prejudice in April 2012.January 2013 appeal hearing date.

Due to the nature of the Company’s activities, it is also, at times, subject to pending and threatened legal actions that arise out of the ordinary course of business. In the opinion of management, based in part upon advice of legal counsel, the disposition of any such matters is not expected to have a material effect on the Company’s results of operations, financial condition or cash flows. However, the results of legal actions cannot be predicted with certainty. Therefore, it is possible that the Company’s results of operations, financial condition or cash flows could be materially adversely affected in any particular period by the unfavorable resolutions of one or more legal actions.

As of ~~June 30,~~September 29, 2012 and ~~July 2,~~October 1, 2011, the Company had in effect interest rate swaps with notional amounts totaling ~~$697,750~~$640,500 and ~~$845,000,~~$800,000, respectively. In January 2009, the Company entered into a forward-starting interest rate swap with an effective date of January 4, 2010 and a termination date of January 27, 2014. During the remaining term of this forward-starting interest rate swap, the notional amount will fluctuate, but will be no higher than the amount outstanding as of the end of the ~~second~~third fiscal quarter. The initial notional amount was $425,000 and the highest notional amount was $755,000.

The Company is hedging forecasted transactions for periods not exceeding the next five years. At ~~June 30,~~September 29, 2012, given the current configuration of its debt, the Company estimates that no derivative gains or losses reported in accumulated other comprehensive income will be reclassified to the ~~Statement~~Statements of Net Income within the next 12 months due to hedge ineffectiveness.

As of ~~June 30,~~September 29, 2012 and ~~July 2,~~October 1, 2011, cumulative unrealized losses for qualifying hedges were reported as a component of accumulated other comprehensive income in the amounts of ~~$9,623~~$8,456 ($~~15,776~~13,863 before taxes) and ~~$18,629~~$17,607 ($~~30,539~~28,864 before taxes), respectively. For the three and ~~six~~nine months ended ~~June 30,~~September 29, 2012 and ~~July 2,~~October 1, 2011, there were no fair value adjustments recorded in the ~~Statement~~Statements of Net Income since all hedges were considered qualifying and effective.

The Company expects approximately $7,275 ($11,926 before taxes) of derivative losses included in accumulated other comprehensive income at June 30, 2012, based on current market rates, will be reclassified into earnings within the next 12 months.

The Company expects approximately $6,926 ($11,355 before taxes) of derivative losses included in accumulated other comprehensive income at September 29, 2012, based on current market rates, will be reclassified into earnings within the next 12 months.

Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

When measuring fair value, the Company is required to maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company’s significant financial instruments include long-term debt and interest rate swap agreements.

The fair value of the Company’s long-term debt is determined by utilizing average bid prices on or near the end of each fiscal quarter (Level 2 input). As of ~~June 30,~~September 29, 2012 and ~~July 2,~~October 1, 2011, the fair value of the Company’s long-term debt was approximately ~~$2,433,249~~$2,390,017 and ~~$1,161,212,~~$1,039,962, respectively.

The fair values for the Company’s derivative financial instruments are determined using observable current market information such as the prevailing LIBOR interest rate and LIBOR yield curve rates and include consideration of counterparty credit risk. See Note 11 for disclosures related to derivative financial instruments.

The following table presents the aggregate fair value of the Company’s derivative financial instruments:


	Fair Value Measurements Using:										Fair Value Measurements Using:
	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Interest rate swap asset at June 30, 2012	$	0	$	0	$	0	$	0
Interest rate swap asset at September 29, 2012									$	0	$	0	$	0	$	0
Interest rate swap asset at December 31, 2011	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Interest rate swap liability at June 30, 2012	$	19,203	$	0	$	19,203	$	0
Interest rate swap liability at September 29, 2012									$	17,009	$	0	$	17,009	$	0
Interest rate swap liability at December 31, 2011	$	24,613	$	0	$	24,613	$	0	$	24,613	$	0	$	24,613	$	0

The Company has two reportable segments: WWI and WW.com. WWI has multiple operating segments which have been aggregated into one reportable segment. WWI and WW.com are two separate and distinct businesses for which discrete financial information is available. This discrete financial information is maintained and managed separately and is reviewed regularly by the chief operating decision maker. All intercompany activity is eliminated in consolidation.


	Three Months Ended June 30, 2012						Three Months Ended September 29, 2012
	WWI		WW.com		Consolidated		WWI		WW.com		Consolidated
Total revenue	$	348,525	$	136,227	$	484,752	$	305,657	$	124,953	$	430,610


Depreciation and amortization	$	8,462	$	2,375	$	10,837	$	8,660	$	2,363	$	11,023


Operating income	$	81,672	$	71,836	$	153,508	$	60,476	$	71,508	$	131,984

Interest expense						23,757						23,225
Other expense, net						3,796
Other income, net												(756	)
Provision for taxes						48,493						42,151

Net income					$	77,462					$	67,364


	Three Months Ended July 2, 2011						Three Months Ended October 1, 2011
	WWI		WW.com		Consolidated		WWI		WW.com		Consolidated
Total revenue	$	379,163	$	106,850	$	486,013	$	325,584	$	102,850	$	428,434


Depreciation and amortization	$	6,496	$	2,412	$	8,908	$	6,323	$	2,587	$	8,910


Operating income	$	100,355	$	54,975	$	155,330	$	82,378	$	55,921	$	138,299

Interest expense						15,012						13,655
Other expense, net						226						285
Provision for taxes						53,236						43,709

Net income					$	86,856					$	80,650


	Six Months Ended June 30, 2012							Nine Months Ended September 29, 2012
	WWI		WW.com		Consolidated			WWI		WW.com		Consolidated
Total revenue	$	723,868	$	264,419	$	988,287		$	1,029,524	$	389,373	$	1,418,897


Depreciation and amortization	$	15,937	$	4,899	$	20,836		$	24,597	$	7,262	$	31,859


Operating income	$	138,986	$	117,296	$	256,282		$	199,461	$	188,805	$	388,266

Interest expense						36,924							60,149
Other expense, net						3,287							2,531
Early extinguishment of debt						1,328							1,328
Provision for taxes						82,676							124,827

Net income					$	132,067						$	199,431


	Six Months Ended July 2, 2011							Nine Months Ended October 1, 2011
	WWI		WW.com		Consolidated			WWI		WW.com		Consolidated
Total revenue	$	788,985	$	200,459	$	989,444		$	1,114,569	$	303,309	$	1,417,878


Depreciation and amortization	$	12,753	$	4,885	$	17,638		$	19,076	$	7,472	$	26,548


Operating income	$	197,855	$	93,205	$	291,060		$	280,234	$	149,125	$	429,359

Interest expense						33,185							46,840
Other income, net						(245	)
Other expense, net													40
Provision for taxes						98,087							141,796

Net income					$	160,033						$	240,683

There has not been a material change in total assets from the Company’s Annual Report on Form 10-K for fiscal 2011.

Except for historical information contained herein, this Quarterly Report on Form 10-Q includes “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, including, in particular, the statements about our plans, strategies and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We have generally used the words “may,” “will,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend” and similar expressions in this Quarterly Report on Form 10-Q to identify forward-looking statements. We have based these forward-looking statements on our current views with respect to future events and financial performance. Actual results could differ materially from those projected in these forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things:

You should not put undue reliance on any forward-looking statements. You should understand that many important factors, including those discussed herein, could cause our results to differ materially from those expressed or suggested in any forward-looking statement. Except as required by law, we do not undertake any obligation to update or revise these forward-looking statements to reflect new information or events or circumstances that occur after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events or otherwise.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Weight Watchers International, Inc. is a Virginia corporation with its principal executive offices in New York, New York. In this Quarterly Report on Form 10-Q unless the context indicates otherwise: “we,” “us,” “our” and the “Company” refer to Weight Watchers International, Inc. and all of its businesses consolidated for purposes of its financial statements; “Weight Watchers International” and “WWI” refer to Weight Watchers International, Inc. and all of the Company’s businesses other than WeightWatchers.com; “WeightWatchers.com” refers to WeightWatchers.com, Inc. and all of the Company’s Internet-based businesses; and “NACO” refers to our North American Company-owned meeting operations.

Our fiscal year ends on the Saturday closest to December 31^st and consists of either 52- or 53-week periods. In this Quarterly Report on Form 10-Q:

The following terms used in this Quarterly Report on Form 10-Q are our trademarks:Weight Watchers^®,PointsPlus^®andProPoints^®.

You should read the following discussion in conjunction with our Annual Report on Form 10-K for fiscal 2011 that includes additional information about us, our results of operations, our financial position and our cash flows, and with our unaudited consolidated financial statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q (collectively, the “Consolidated Financial Statements”).

As exchange rates are an important factor in understanding period-to-period comparisons, we believe the presentation of results on a constant currency basis in addition to reported results helps improve investors’ ability to understand our operating results and evaluate our performance in comparison to prior periods. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. We use results on a constant currency basis as one measure to evaluate our performance. In this Quarterly Report on Form 10-Q, we calculate constant currency by calculating current-year results using prior-year foreign currency exchange rates. We generally refer to such amounts calculated on a constant currency basis as excluding or adjusting for the impact of foreign currency. These results should be considered in addition to, not as a substitute for, results reported in accordance with accounting principles generally accepted in the United States, or GAAP. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.

For a discussion of the critical accounting policies affecting us, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” of our Annual Report on Form 10-K for fiscal 2011. Our critical accounting policies have not changed since the end of fiscal 2011.

Fiscal 2011 was a year of revenue and volume growth in all fiscal quarters as compared to the prior year periods. We ~~began fiscal 2011 with a customer base that had grown by more than 20% since the beginning of fiscal 2010 and throughout the year~~ experienced accelerated period-over-period volume growth in our North American and UK meetings and Weight Watchers.com ~~businesses.~~businesses throughout the year. The momentum of our new program launches,PointsPlusin North America andProPoints in our other English-speaking markets, and strong marketing and public relations efforts drove this accelerated growth and historically high volumes in fiscal 2011.

~~Like~~Similar to the first and second quarters of fiscal 2012, the third quarter of fiscal 2012 had, though to a lesser extent than the first and second ~~quarter of fiscal 2012 had~~quarters, the challenge of being compared against the historically high levels of recruitment growth and related results of fiscal 2011. Total paid weeks in the second quarter of fiscal 2012 continued to grow, up 11.1% versus the prior year period, but at a slower rate than the 40.4% growth we experienced in the second quarter of fiscal 2011 versus the prior year period. Net revenues were ~~$484.8~~$430.6 million in the ~~second~~third quarter of fiscal 2012, as compared to ~~$486.0~~$428.4 million in the ~~second~~third quarter of fiscal 2011. Growth in ~~Online~~Internet revenues in the ~~second~~third quarter of fiscal 2012 versus the prior year period was almost fully offset by revenue declines in the meetings business. Despite gross margin for the third quarter of fiscal 2012 growing to 59.4% from 58.6% in the third quarter of fiscal 2011, our investments in growth initiatives in the quarter resulted in an increase in both selling, general and administrative expenses and marketing expenses as a percentage of revenue in the third quarter of fiscal 2012 versus the prior year period. As a result, operating income margin for the third quarter of fiscal 2012 declined to 30.7% from 32.3% in the third quarter of fiscal 2011. Consequently, and as a result of higher interest expense and a higher tax rate, net income attributable to the Company in the third quarter of fiscal 2012 declined 16.5% versus the prior year period to $67.4 million.

The first nine months of fiscal 2012 versus the prior year period had similar performance trends as each of the individual fiscal quarters. Net revenues were $1,418.9 million in the first nine months of fiscal 2012, as compared to $1,417.9 million in the first nine months of fiscal 2011. Growth in Internet revenues in the first nine months of fiscal 2012 versus the prior year period was almost fully offset by revenue declines in the meetings business. Gross margin for the second quarter of fiscal 2012 grew to 60.6% from 59.1% in the second quarter of fiscal 2011. Our investments in strategic growth initiatives in the quarter resulted in an increase in marketing expenses as a percentage of revenue in the second quarter of fiscal 2012 versus the prior year period. Selling and general expenses also increased in the second quarter of fiscal 2012 versus the prior year period as a result of these investments, but this increase was more than fully offset by lower administrative expenses in the quarter versus the prior year period. As a result of our investments in the second quarter of fiscal 2012, operating income margin for the second quarter of fiscal 2012 declined to 31.7% from 32.0% in the second quarter of fiscal 2011. Consequently, and as a result of higher interest expense and a write-off of an investment, net income attributable to the Company in the second quarter of fiscal 2012 declined 10.9% versus the prior year period to $77.5 million.

~~Given both the~~ first and second quarters of fiscal 2012 experienced the same challenge of being compared against the high levels of recruitment growth and related results of fiscal 2011, as well as the continued investments in strategic growth initiatives in the first and second quarters of fiscal 2012, the first six months of fiscal 2012 versus the prior year period had similar performance trends as each of the quarters. Total paid weeks in the first six months of fiscal 2012 grew by 11.6% versus the prior year period. Net revenues were $988.3 million in the first six months of fiscal 2012, as compared to $989.4 million in the first six months of fiscal 2011. Growth in Online revenues in the first six months of fiscal 2012 versus the prior year period was fully offset by revenue declines in the meetings business. Gross margin for the first sixnine months of fiscal 2012 grew to ~~58.9%~~59.0% from ~~57.6%~~57.9% in the first ~~six~~nine months of fiscal 2011. ~~Marketing~~Both marketing expenses and selling, general and administrative expenses increased as a percentage of revenue in the first ~~six~~nine months of fiscal 2012 versus the prior year ~~period.~~period due to our investments in growth initiatives. As a result, ~~of the investments in strategic growth initiatives,~~ operating income margin for the first ~~six~~nine months of fiscal 2012 declined 2.9% to ~~25.9%~~27.4% from ~~29.4%~~30.3% in the first ~~six~~nine months of fiscal 2011. Consequently, and as a result of higher interest expense, ~~and~~ a write-off of an investment and a higher tax rate, net income attributable to the Company in the first ~~six~~nine months of fiscal 2012 declined ~~17.7%~~17.3% versus the prior year period to ~~$132.1~~$199.4 million.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED ~~JUNE 30,~~SEPTEMBER 29, 2012 COMPARED TO THE THREE MONTHS ENDED ~~JULY 2,~~OCTOBER 1, 2011

The table below sets forth selected financial information for the ~~second~~third quarter of fiscal 2012 from our consolidated statements of net income for the three months ended ~~June 30,~~September 29, 2012 versus selected financial information for the ~~second~~third quarter of fiscal 2011 from our consolidated statements of net income for the three months ended ~~July 2,~~October 1, 2011:


	(In millions, except per share amounts)										(In millions, except per share amounts)
	For the Three Months Ended										For the Three Months Ended
	June 30, 2012			July 2, 2011			Increase/ (Decrease)		% Change		September 29, 2012			October 1, 2011			Increase/ (Decrease)		% Change
Revenues, net	$	484.8		$	486.0		$	(1.3)		(0.3%)	$	430.6		$	428.4		$	2.2		0.5%

Cost of revenues		191.2			198.9			(7.6)		(3.8%)		174.8			177.3			(2.5)		(1.4%)


Gross profit		293.5			287.2			6.4		2.2%		255.8			251.2			4.6		1.9%
Gross Margin %		60.6	%		59.1	%						59.4	%		58.6	%

Marketing expenses		83.8			75.2			8.6		11.5%		65.9			61.5			4.4		7.1%

Selling, general & administrative expenses		56.2			56.7			(0.4)		(0.8%)		58.0			51.4			6.6		12.8%

Operating income		153.5			155.3			(1.8)		(1.2%)		132.0			138.3			(6.3)		(4.6%)
Operating Income Margin %		31.7	%		32.0	%						30.7	%		32.3	%

Interest expense		23.8			15.0			8.7		58.2%		23.2			13.7			9.6		70.1%
Other expense, net		3.8			0.2			3.6		+100.0%
Other (income) expense, net												(0.8)			0.3			(1.0)		-100.0%

Income before income taxes		126.0			140.1			(14.1)		(10.1%)		109.5			124.4			(14.8)		(11.9%)

Provision for income taxes		48.5			53.2			(4.7)		(8.9%)		42.2			43.7			(1.6)		(3.6%)

Net income		77.5			86.9			(9.4)		(10.8%)

Net loss attributable to the noncontrolling interest		—			0.1			(0.1)		(100.0%)

Net income attributable to the Company	$	77.5		$	87.0		$	(9.5)		(10.9%)	$	67.4		$	80.7		$	(13.3)		(16.5%)


Weighted average diluted shares outstanding		57.1			74.4			(17.2)		(23.1%)		56.1			74.3			(18.1)		(24.4%)


Diluted EPS	$	1.36		$	1.17		$	0.19		15.9%	$	1.20		$	1.09		$	0.11		10.5%

Net revenues were ~~$484.8~~$430.6 million in the ~~second~~third quarter of fiscal 2012, as compared to ~~$486.0~~$428.4 million in the ~~second~~third quarter of fiscal 2011. Excluding the impact of foreign currency, which negatively impacted our revenues for the ~~second~~third quarter of fiscal 2012 by ~~$12.4~~$9.2 million, net revenues in the ~~second~~third quarter of fiscal 2012 grew ~~2.3%~~2.7% versus the prior year period. The ~~second~~third quarter of fiscal 2012 benefited from a higher active Online subscriber base at the start of the quarter as compared to the start of the ~~second~~third quarter of fiscal 2011 and more effective marketing in the Continental European meetings business. Revenue growth on a constant currency basis in our Continental European meetings business was ~~completely~~more than offset by revenue declines in the NACO and UK meetings businesses as they cycled against the momentum of their new program ~~launches in late fiscal 2010~~innovations and ~~strong~~stronger marketing in the ~~second~~third quarter of fiscal 2011. ~~Meeting~~In addition, meeting revenues in the ~~second~~third quarter of fiscal 2012 continued to be negatively impacted by the execution challenges associated with introducing the Monthly Pass commitment plan to NACO’s small accounts portion of its corporate business in the first quarter of fiscal ~~2012. In addition, beginning towards~~2012, though to a lesser extent than the ~~end of the second quarter~~first half of fiscal 2012, ~~enrollments in NACO were affected~~as well as by macro-economic factors, particularly consumer confidence, ~~which negatively impacted revenue~~ in the second quarter of fiscal 2012. Further, while effective marketing contributed to revenue growth in Continental Europe, marketing in the second quarter of fiscal 2012 for the UK meetings business was less effective than the prior year periodNACO and ~~also negatively impacted revenue. Weak macro-economic trends in~~ the United ~~Kingdom contributed to the revenue decline in the UK meetings business as well.~~Kingdom.

The combination of the above factors ~~which negatively impacted meeting revenues in the quarter~~also led to a ~~4.7%~~4.2% decline in global meeting paid weeks in the ~~second~~third quarter of fiscal 2012 versus the prior year period. In contrast, with the benefits of starting the ~~second~~third quarter with a higher active Online subscriber base and effective marketing for the Weight Watchers Online product, particularly in Continental Europe, WeightWatchers.com experienced growth of ~~30.2%~~23.2% in Online paid weeks, as well as a ~~26.4%~~19.5% increase in end of period active Online subscribers, in the ~~second~~ third

quarter of fiscal 2012 versus the prior year period. The increase in Online paid weeks more than offset the decline in meeting paid weeks which resulted in an ~~11.1%~~8.8% increase in global paid weeks in the ~~second~~third quarter of fiscal 2012 versus the prior year period. Global attendance in the ~~second~~third quarter of fiscal 2012 declined ~~9.6%~~10.2% in comparison to the ~~second~~third quarter of fiscal 2011.

Gross profit for the ~~second~~third quarter of fiscal 2012 of ~~$293.5~~$255.8 million increased ~~$6.4~~$4.6 million, or ~~2.2%~~1.9%, from ~~$287.2~~$251.2 million in the ~~second~~third quarter of fiscal 2011. Excluding the impact of foreign currency, which negatively impacted gross profit for the third quarter of fiscal 2012 by $5.4 million, gross profit in the third quarter of fiscal 2012 increased by $10.0 million, or 4.0%, versus the prior year period. Operating income for the ~~second~~third quarter of fiscal 2012 was ~~$153.5~~$132.0 million, a decrease of ~~$1.8~~$6.3 million, or ~~1.2%~~4.6%, from ~~$155.3~~$138.3 million in the ~~second~~third quarter of fiscal 2011. Excluding the impact of foreign currency, which negatively impacted operating income for the ~~second~~third quarter of fiscal 2012 by ~~$3.6~~$3.2 million, operating income in the ~~second~~third quarter of fiscal 2012 ~~increased~~decreased by ~~$1.7~~$3.1 million, or ~~1.1%~~2.2%, versus the prior year period. This decline in operating income was primarily the result of an increase in selling, general and administrative expenses and marketing investments in the third quarter of fiscal 2012 versus the prior year period. Our gross margin in the ~~second~~third quarter of fiscal 2012 increased to ~~60.6%~~59.4% from ~~59.1%~~58.6% in the ~~second~~third quarter of fiscal 2011, but operating income margin in the ~~second~~third quarter of fiscal 2012 declined to ~~31.7%~~30.7% from ~~32.0%~~32.3% in the ~~second~~third quarter of fiscal 2011. See “—Components of Expenses and Margins” for additional details.

Net income attributable to the Company in the ~~second~~third quarter of fiscal 2012 declined ~~10.9%~~16.5% from ~~$87.0~~$80.7 million in the ~~second~~third quarter of fiscal 2011 to ~~$77.5~~$67.4 million. ~~This decline was~~In addition to the ~~result of marketing investments in the second quarter of fiscal 2012 causing a~~ decline in operating income, ~~in the quarter versus the prior year period. In addition,~~ higher interest expense resulting from our financing of our repurchase of shares in the Tender Offer (defined below) and related share repurchase from Artal Holdings (defined below) and a higher tax rate, primarily resulting from the ~~write-off~~tax benefit associated with the closure of ~~an investment~~our Finland business in the third quarter of fiscal 2011, further reduced net income in the ~~second~~third quarter of fiscal 2012.

Earnings per fully diluted share in the ~~second~~third quarter of fiscal 2012 were ~~$1.36,~~$1.20, an increase of ~~$0.19~~$0.11 from ~~$1.17~~$1.09 in the ~~second~~third quarter of fiscal 2011. Earnings per fully diluted share in the ~~second~~third quarter of fiscal 2012 benefited from our repurchase of shares in the Tender Offer and the related share repurchase from Artal Holdings in the first half of fiscal 2012 as our weighted average diluted shares outstanding decreased to ~~57.1~~56.1 million in the quarter from ~~74.4~~74.3 million in the prior year period. See “—Liquidity and Capital Resources—Dividends and Stock Transactions” for a description of the Tender Offer and related share repurchase from Artal Holdings.

We derive our revenues principally from meeting fees, products sold in meetings, Internet revenues, and licensed products sold in retail channels. In addition, we generate other revenue from royalties paid to us by our franchisees, subscriptions to our branded magazines, and advertising in our publications.

Global meeting fees for the ~~second~~third quarter of fiscal 2012 were ~~$248.5~~$223.2 million, a decrease of ~~$21.1~~$10.2 million, or ~~7.8%~~4.4%, from ~~$269.6~~$233.4 million in the prior year period. Excluding the impact of foreign currency, which decreased our global meeting fees for the ~~second~~third quarter of fiscal 2012 by ~~$6.3~~$4.6 million, global meeting fees in the ~~second~~third quarter of fiscal 2012 decreased by ~~5.5%~~2.4% versus the prior year period. The decline in meeting fees was driven by a ~~4.7%~~4.2% decline in global meeting paid weeks in the ~~second~~third quarter of fiscal 2012 to ~~27.0~~23.9 million from ~~28.3~~24.9 million in the prior year period. The decline in meeting paid weeks was driven by the lower meeting membership base we had at the beginning of the ~~second~~third quarter of fiscal 2012 versus the beginning of the prior year period, as well as lower enrollments in the quarter versus the prior year period. Global attendance decreased ~~9.6%~~10.2% to ~~13.9~~11.3 million in the ~~second~~third quarter of fiscal 2012 from ~~15.4~~12.6 million in the ~~second~~third quarter of fiscal 2011.

In NACO, meeting fees in the ~~second~~third quarter of fiscal 2012 were ~~$173.3~~$157.8 million, a decrease of ~~$12.2~~$3.5 million, or ~~6.6%~~2.2%, from ~~$185.6~~$161.2 million in the ~~second~~third quarter of fiscal 2011. The decline in meeting fees was driven primarily by a ~~5.5%~~3.6% decline in NACO meeting paid weeks from ~~19.0~~16.6 million in the ~~second~~third quarter of fiscal 2011 to ~~17.9~~16.0 million in the ~~second~~third quarter of fiscal 2012. The decline in meeting paid weeks was driven by the lower meeting membership base at the beginning of the ~~second~~third quarter of fiscal 2012 versus the beginning of the prior year period, as well as lower enrollments in the quarter versus the prior year period. ~~Lower~~In addition to the negative impact of the macro-economic climate, enrollments in the quarter were ~~driven in part~~negatively impacted primarily by less promotional activity, as well as less effective marketing, versus the prior year period. The execution challenges associated with introducing Monthly Pass to the small accounts portion of NACO’s corporate business in early fiscal 2012 continued to have a negative impact on volumes, but to a lesser extent than the first half of fiscal 2012. Slightly offsetting this volume decline was a 1.7% increase in meeting fees per paid week on a constant currency basis in the third quarter of fiscal 2012 ~~and~~versus the ~~impact~~prior year period, primarily the result of a December 2011 price increase for the ~~macro-economic climate on~~U.S. Monthly Pass, which was partially offset by a shift to the ~~business towards~~Monthly Pass model in NACO’s corporate business. NACO revenues for the ~~end of second~~third quarter of fiscal 2012 ~~particularly as it related to consumer sentiment.~~also reflected a de minimis benefit from our September 2012 acquisition of substantially all of the assets of our Southeastern Ontario and Ottawa, Canada, franchisee. In the ~~second~~third quarter of fiscal 2012, NACO attendance decreased ~~9.9%~~9.4% to ~~8.8~~7.2 million from ~~9.7~~7.9 million in the ~~second~~third quarter of fiscal 2011.

International meeting fees in the ~~second~~third quarter of fiscal 2012 were ~~$75.2~~$65.4 million, a decrease of ~~$8.8~~$6.7 million, or ~~10.5%~~9.3%, from ~~$84.0~~$72.2 million in the prior year period. Excluding the impact of foreign currency, which decreased international meeting fees for the ~~second~~third quarter of fiscal 2012 by ~~$5.8~~$4.5 million, international meeting fees declined by ~~3.7%~~3.1% in the ~~second~~third quarter of fiscal 2012 versus the prior year period. ~~The decline in~~Third quarter fiscal 2012 meeting fees ~~was~~were driven lower by a ~~3.0%~~5.4% decline in international meeting paid weeks in the ~~second~~third quarter of fiscal 2012 versus the prior year period. ~~The decline~~Meeting paid weeks performance in ~~meeting paid weeks~~the third quarter of fiscal 2012 was driven by the lower meeting membership base at the beginning of the ~~second~~quarter versus the beginning of the prior year period, as well as lower enrollments, particularly in the United Kingdom, in the quarter versus the prior year period. International attendance decreased by 11.4% in the third quarter of fiscal 2012 versus the prior year period.

In the third quarter of fiscal 2012, UK meeting fees decreased by 14.0% to $25.3 million from $29.4 million in the third quarter of fiscal 2011. Excluding the impact of foreign currency, which decreased UK meeting fees for the third quarter of fiscal 2012 by $0.5 million, UK meeting fees declined by 12.3% in the third quarter of fiscal 2012 versus the prior year period. Third quarter fiscal 2012 meeting fees were driven lower primarily by a decline of 12.5% in UK meeting paid weeks in the third quarter of fiscal 2012 versus the prior year period. Meeting paid weeks performance in the third quarter of fiscal 2012 was driven by the lower meeting membership base at the beginning of the quarter versus the beginning of the prior year period, as well as lower enrollments in the quarter versus the prior year period. ~~International attendance decreased by 9.1%~~Enrollments in the ~~second~~ quarter ~~of fiscal 2012~~were negatively impacted primarily by less effective marketing and the macro-economic climate versus the prior year period.

In the second quarter of fiscal 2012, UK meeting fees decreased by 15.5% to $27.0 million from $31.9 million in the second quarter of fiscal 2011. The decline in meeting fees was driven primarily by a decline of 9.4% in UK meeting paid weeks in the second quarter of fiscal 2012 versus the prior year period. The decline in meeting paid weeks was driven by the lower meeting membership base at the beginning of the second quarter of fiscal 2012 versus the beginning of the prior year period, as well as lower enrollments in the quarter versus the prior year period. The advertising campaign that was introduced in the United Kingdom in the first quarter of fiscal 2012 continued to be ineffective in driving enrollment growth in the second quarter of fiscal 2012. Weak macro-economic trends in the United Kingdom also contributed to the decline in enrollments. UK attendance decreased by ~~14.6%~~17.5% in the ~~second~~third quarter of fiscal 2012 versus the prior year period.

The Continental European meetings business experienced a decrease in meeting fees of ~~3.9%~~0.8% to ~~$37.5~~$30.6 million in the ~~second~~third quarter of fiscal 2012 from ~~$39.0~~$30.9 million in the ~~second~~third quarter of fiscal 2011. Excluding the impact of foreign currency, which decreased Continental European meeting fees for the ~~second~~third quarter of fiscal 2012 by ~~$4.4~~$3.8 million, Continental European meeting fees increased by ~~7.5%~~11.6% in the ~~second~~third quarter of fiscal 2012 as compared to the prior year period. The increase in meeting fees on a constant currency basis was driven by an increase of ~~11.0%~~12.1% in Continental European meeting paid weeks in the ~~second~~third quarter of fiscal 2012 versus the prior year period. The increase in meeting paid weeks was driven primarily by the higher meeting membership base at the beginning of the ~~second~~third quarter of fiscal 2012 versus the beginning of the prior year ~~period, as well as higher~~period. Despite the difficult economic climate across Continental Europe, we experienced a slight increase in enrollments in the quarter versus the prior year ~~period. These higher enrollments were~~period, which was the result of effective new marketing strategies ~~in this region, particularly~~ in France and Germany. In Continental Europe, attendance increased by ~~2.7%~~4.9% in the ~~second~~third quarter of fiscal 2012 versus the prior year period.

Global in-meeting product sales for the ~~second~~third quarter of fiscal 2012 were ~~$64.5~~$54.6 million, a decrease of ~~$8.1~~$6.6 million, or ~~11.1%~~10.8%, from ~~$72.6~~$61.3 million in the ~~second~~third quarter of fiscal 2011. Excluding the impact of foreign currency, which decreased in-meeting product sales for the ~~second~~third quarter of fiscal 2012 by ~~$2.2~~$1.4 million, global in-meeting product sales in the ~~second~~third quarter of fiscal 2012 declined ~~8.1%~~8.4% versus

the prior year period. This decrease resulted primarily from a ~~9.6%~~10.2% decline in global meeting attendance in the quarter versus the prior year period. On a per attendee basis, ~~second~~third quarter fiscal 2012 global in-meeting product sales decreased ~~1.6%~~0.7%, but increased ~~1.7%~~1.9% on a constant currency basis, versus the prior year period. This increase in in-meeting product sales per attendee in the ~~second~~third quarter of fiscal 2012 was primarily the result of ~~higher sales of our consumable products~~product category expansion in ~~both~~ North America and ~~the United Kingdom.~~Continental Europe.

In NACO, ~~second~~third quarter fiscal 2012 in-meeting product sales of ~~$35.7~~$32.0 million decreased by ~~$3.0~~$2.3 million, or ~~7.8%~~6.6%, versus the prior year period. This decrease was driven by a ~~9.9%~~9.4% attendance decline, and was partially offset by a ~~2.4%~~3.1% increase in in-meeting product sales per attendee, in the ~~second~~third quarter of fiscal 2012 as compared to the prior year period.

International in-meeting product sales were ~~$28.9~~$22.7 million in the ~~second~~third quarter of fiscal 2012, a decrease of ~~14.9%~~16.1%, or ~~8.8%~~10.9% on a constant currency basis, versus the prior year period. This decrease was driven primarily by an attendance decline of ~~9.1%~~11.4% in the ~~second~~third quarter of fiscal 2012 as compared to the ~~second~~third quarter of fiscal ~~2011.~~2011, which was largely driven by the United Kingdom. In addition, in-meeting product sales per attendee ~~of $5.62~~ in the ~~second~~third quarter of fiscal 2012 declined by ~~6.4%~~5.3%, but increased by ~~0.3%~~0.6% on a constant currency basis, as compared to the prior year period.

Internet revenues, which include subscription revenues from sales of our Weight Watchers Online and Weight Watchers eTools products as well as Internet advertising revenues, increased ~~$29.9~~$22.3 million, or ~~28.3%~~21.9%, to ~~$135.6~~$124.2 million in the ~~second~~third quarter of fiscal 2012 from ~~$105.7~~$101.9 million in the ~~second~~third quarter of fiscal 2011. Excluding the impact of foreign currency, which decreased Internet revenues for the ~~second~~third quarter of fiscal 2012 by ~~$2.9~~$2.3 million, Internet revenues grew by ~~31.0%~~24.2% in the ~~second~~third quarter of fiscal 2012 versus the prior year period. The combination of a higher active Online subscriber base at the start of the ~~second~~third quarter of fiscal 2012, up ~~32.3%~~26.4%, versus the beginning of the ~~second~~third quarter of fiscal 2011 and effective marketing campaigns in Continental Europe and Canada contributed to Online paid weeks growth of ~~30.2%~~23.2% in the ~~second~~third quarter of fiscal 2012 versus the prior year period. The growth rate in Online paid weeks in the third quarter of fiscal 2012 versus the prior year period was less than the comparable growth rate in the first and second quarters of fiscal 2012. This declining trend is the result of lower sign-ups in our US and UK markets, which were driven by the same challenges the meetings business faced in those markets in the third quarter of fiscal 2012. Additionally, end of period active Online subscribers increased by ~~26.4%~~19.5% to ~~2.3~~2.1 million at the end of the ~~second~~third quarter of fiscal 2012 as compared to ~~1.8~~1.7 million at the end of the ~~second~~third quarter of fiscal 2011.

Other revenues, comprised primarily of licensing revenues, franchise royalties, revenues from the sale of products by mail and to our franchisees, and revenues from our publications, were ~~$36.1~~$28.5 million for the ~~second~~third quarter of fiscal 2012, a decrease of ~~$2.0~~$3.4 million, or ~~5.3%~~10.5%, from ~~$38.2~~$31.9 million for the ~~second~~third quarter of fiscal 2011. Excluding the impact of foreign currency, which decreased other revenues for the ~~second~~third quarter of fiscal 2012 by ~~$1.1~~$0.8 million, other revenues were ~~2.8%~~8.1% lower in the ~~second~~third quarter of fiscal 2012 compared to the prior year period. Franchise commissions and sales of products to our franchisees declined in the aggregate by ~~24.7%~~16.2%, or ~~23.3%~~15.1% on a constant currency basis, in the ~~second~~third quarter of fiscal 2012 versus the prior year period. Our by mail product sales and revenues from our publications also declined in the aggregate by ~~14.5%~~18.4%, or ~~11.9%~~15.2% on a constant currency basis, in the ~~second~~third quarter of fiscal 2012 versus the prior year ~~period level.~~period. These declines were primarily the result of comparing against the prior year period, which had the benefit of the momentum of the new program launches in our English-speaking markets in late fiscal 2010. Global licensing revenues in the ~~second~~third quarter of fiscal 2012 decreased by 2.3%, but increased slightly by 12.8% versus the prior year period. A one-time termination fee in the second quarter of fiscal 2012 which was included in licensing revenues accounted for all the increase versus the prior year period. Excluding this one-time termination fee of $2.0 million from licensing revenues, global licensing revenues in the second quarter of fiscal 2012 declined 0.6%0.2% on a constant currency basis, versus the prior year period.

Total cost of revenues in the ~~second~~third quarter of fiscal 2012 was ~~$191.2~~$174.8 million, a decrease of ~~$7.6~~$2.5 million, or ~~3.8%~~1.4%, from ~~$198.9~~$177.3 million in the prior year period. Cost of revenues declined at a faster pace than revenues due to the continued shift of revenue towards the higher margin WeightWatchers.com business. Gross profit for the ~~second~~third quarter of fiscal 2012 of ~~$293.5~~$255.8 million increased ~~$6.4~~$4.6 million, or ~~2.2%~~1.9%, from ~~$287.2~~$251.2 million in the ~~second~~third quarter of fiscal 2011. Gross margin in the ~~second~~third quarter of fiscal 2012 was ~~60.6%~~59.4%, as compared to ~~59.1%~~58.6% in the ~~second~~third quarter of fiscal 2011. Gross margin expansion was primarily the result of the continued shift in revenue towards the higher margin WeightWatchers.com business. This margin expansion was partially offset by a decline in the meetings business gross margin. This decline in the meetings business gross margin was primarily driven by ~~the impact of higher costs associated with our future growth initiatives and~~a lower average number of members per ~~meeting.~~meeting, costs associated with our initiative to modernize and update our retail centers in the United States, the impact of lower product sales margin and one-time costs associated with NACO’s transition to a new customer service provider.

Marketing expenses for the ~~second~~third quarter of fiscal 2012 were ~~$83.8~~$65.9 million, an increase of ~~$8.6~~$4.4 million, or ~~11.5%~~7.1%, versus the ~~second~~third quarter of fiscal 2011. Excluding the impact of foreign currency, which decreased marketing expenses for the ~~second~~third quarter of fiscal 2012 by ~~$2.2~~$1.1 million, marketing expenses were ~~14.4%~~8.9% higher in the ~~second~~third quarter of fiscal 2012 compared to the prior year period. ~~Second~~In the third quarter of fiscal 2012, marketing expenses were higher primarily due to investments in two ~~strategic~~ initiatives: ~~the~~ first time Online TV marketing campaigns in three of our international markets and investment in marketing the Weight Watchers Online product to men in the United States to build awareness and communicate the relevance of the Weight Watchers brand to the male demographic, and the second, first time Online TV marketing campaigns in several of our international markets, particularly Continental Europe.States. In addition, ~~we invested in TV advertising for Continental Europe’s meetings business, which contributed to the increase in marketing expenses~~ in the ~~second~~third quarter of fiscal ~~2012.~~2012, we increased our investment in other advertising for the Online business in the United States and increased our celebrity TV advertising spend in Germany for the meetings business. The ~~increase in marketing expenses also reflected the~~ impact of higher volumes on online advertising ~~costs.~~costs also contributed to the increase in marketing expenses. Marketing expenses as a percentage of revenue were ~~17.3%~~15.3% in the ~~second~~third quarter of fiscal 2012 as compared to ~~15.5%~~14.4% in the prior year period.

Selling, general and administrative expenses were ~~$56.2~~$58.0 million for the ~~second~~third quarter of fiscal 2012 versus ~~$56.7~~$51.4 million for the ~~second~~third quarter of fiscal 2011, ~~a decrease~~an increase of ~~$0.4~~$6.6 million, or ~~0.8%~~12.8%. Excluding the impact of foreign currency, which decreased selling, general and administrative expenses for the ~~second~~third quarter of fiscal 2012 by ~~$1.3~~$1.1 million, ~~second~~third quarter fiscal 2012 selling, general and administrative expenses increased by ~~1.5%~~14.9% versus the ~~second~~third quarter of fiscal 2011. The increase in expenses was primarily related to investments in growth initiatives, including NACO’s corporate business, technology for the development of ~~our mobile~~customer relationship management platforms and additions to staff in support of ~~business development.~~these initiatives, as well as a one-time expense associated with the move of our New York headquarters facilities planned for next year. Lower bad debt expense in NACO and lower bonus expense ~~accruals~~globally related to business performance partially offset ~~the~~this increase. Selling, general and administrative expenses as a percentage of revenue for the ~~second~~third quarter of fiscal 2012 ~~decreased~~increased to ~~11.6%~~13.5% from ~~11.7%~~12.0% for the ~~second~~third quarter of fiscal 2011.

Our operating income margin in the ~~second~~third quarter of fiscal 2012 decreased to ~~31.7%~~30.7%, a decrease of ~~30 basis points~~1.6% from ~~32.0%~~32.3% in the ~~second~~third quarter of fiscal 2011. The decline in operating income margin was primarily driven by an increase in selling, general and administrative expenses and in marketing costs related to first time Online TV marketing campaigns in three of our ~~investment in~~international markets, as well as marketing the Weight Watchers Online product to men in the United ~~States and costs related to first time Online TV marketing campaigns in several of our international markets in~~States. In the ~~second~~third quarter of fiscal ~~2012. Marketing~~2012, both selling, general and administrative expenses and marketing expenses increased as a percentage of revenue ~~in the second quarter of fiscal 2012~~ as compared to the prior year period.

Interest expense was ~~$23.8~~$23.2 million for the ~~second~~third quarter of fiscal 2012, an increase of ~~$8.7~~$9.6 million, or ~~58.2%~~70.1%, from ~~$15.0~~$13.7 million in the ~~second~~third quarter of fiscal 2011. The increase was primarily driven by higher interest rates on our debt and an increase in our average debt outstanding. The effective interest

rate on our debt increased by ~~0.82%~~0.80% to ~~2.97%~~2.92% in the ~~second~~third quarter of fiscal 2012 from ~~2.15%~~2.12% in the ~~second~~third quarter of fiscal 2011. Our average debt outstanding increased by ~~$1,237.2~~$1,331.8 million to ~~$2,458.1~~$2,456.7 million in the ~~second~~third quarter of fiscal 2012 from ~~$1,220.9~~$1,124.9 million in the ~~second~~third quarter of fiscal 2011. The increase in average debt outstanding was driven by the additional borrowings under the WWI Credit Facility (defined below) in connection with our repurchase of shares in the Tender Offer and the related share repurchase from Artal Holdings (see “—Liquidity and Capital Resources—Dividends and Stock Transactions”). Interest expense was partially offset by a decrease in the notional value and interest rates of our interest rate swaps, which resulted in a lower effective interest rate of ~~3.53%~~3.43% in the ~~second~~third quarter of fiscal 2012, as compared to ~~4.47%~~4.43% in the ~~second~~third quarter of fiscal 2011.

The Company incurred ~~$3.8~~$0.8 million of other ~~expense~~income in the ~~second~~third quarter of fiscal 2012 as compared to ~~$0.2~~$0.3 million of other expense in the prior year period, primarily reflecting ~~the write-off associated with an investment and~~ the impact of foreign currency on intercompany transactions.

Our effective tax rate was 38.5% for the ~~second~~third quarter of fiscal 2012 as compared to ~~38.0%~~35.1% for the ~~second~~third quarter of fiscal 2011. The difference in period-over-period effective tax rates is primarily the result of the ~~reversal~~tax benefit associated with the closure of ~~certain tax reserves due to~~our Finland business in the ~~expiration~~third quarter of ~~the applicable statutes of limitations.~~fiscal 2011.

RESULTS OF OPERATIONS FOR THE ~~SIX~~NINE MONTHS ENDED ~~JUNE 30,~~SEPTEMBER 29, 2012 COMPARED TO THE ~~SIX~~NINE MONTHS ENDED ~~JULY 2,~~OCTOBER 1, 2011

The table below sets forth selected financial information for the first ~~half~~nine months of fiscal 2012 from our consolidated statements of net income for the ~~six~~nine months ended ~~June 30,~~September 29, 2012 versus selected financial information for the first ~~half~~nine months of fiscal 2011 from our consolidated statements of net income for the ~~six~~nine months ended ~~July 2,~~October 1, 2011:


	(In millions, except per share amounts)										(In millions, except per share amounts)
	For the Six Months Ended										For the Nine Months Ended
	June 30, 2012			July 2, 2011			Increase/ (Decrease)		% Change		September 29, 2012			October 1, 2011			Increase/ (Decrease)		% Change
Revenues, net	$	988.3		$	989.4		$	(1.2)		(0.1%)	$	1,418.9		$	1,417.9		$	1.0		0.1%

Cost of revenues		406.4			419.2			(12.8)		(3.0%)		581.2			596.4			(15.2)		(2.6%)

Gross profit		581.9			570.3			11.6		2.0%		837.7			821.5			16.2		2.0%
Gross Margin %		58.9	%		57.6	%						59.0	%		57.9	%

Marketing expenses		214.1			170.8			43.3		25.3%		280.0			232.3			47.6		20.5%
Selling, general & administrative expenses		111.5			108.4			3.1		2.9%		169.5			159.8			9.7		6.1%

Operating income		256.3			291.1			(34.8)		(11.9%)		388.3			429.4			(41.1)		(9.6%)
Operating Income Margin %		25.9	%		29.4	%						27.4	%		30.3	%

Interest expense		36.9			33.2			3.7		11.3%		60.1			46.8			13.3		28.4%
Other (income) expense, net		3.3			(0.2	)		3.5		-100.0%
Other expense, net												2.5			0.1			2.5		+100.0%
Early extinguishment of debt		1.3			—			1.3		+100.0%		1.3			—			1.3		+100.0%

Income before income taxes		214.7			258.1			(43.4)		(16.8%)		324.3			382.5			(58.2)		(15.2%)

Provision for income taxes		82.7			98.1			(15.4)		(15.7%)		124.8			141.8			(17.0)		(12.0%)

Net income		132.1			160.0			(28.0)		(17.5%)		199.4			240.7			(41.3)		(17.1%)
Net loss attributable to the noncontrolling interest		—			0.5			(0.5)		(100.0%)		—			0.5			(0.5)		(100.0%)

Net income attributable to the Company	$	132.1		$	160.6		$	(28.5)		(17.7%)	$	199.4		$	241.2		$	(41.8)		(17.3%)


Weighted average diluted shares outstanding		65.7			74.1			(8.4)		(11.3%)		62.5			74.0			(11.6)		(15.6%)


Diluted EPS	$	2.01		$	2.17		$	(0.16)		(7.2%)	$	3.19		$	3.26		$	(0.07)		(2.0%)

Net revenues were ~~$988.3~~$1,418.9 million in the first ~~six~~nine months of fiscal 2012, as compared to ~~$989.4~~$1,417.9 million in the first ~~six~~nine months of fiscal 2011. Excluding the impact of foreign currency, which negatively impacted our revenues for the first ~~six~~nine months of fiscal 2012 by ~~$14.9~~$24.1 million, net revenues in the first ~~six~~nine months of fiscal 2012 grew ~~1.4%~~1.8% versus the prior year period. Revenue growth in the first ~~six~~nine months of fiscal 2012 was driven primarily by WeightWatchers.com which benefited from a higher active Online subscriber base at the start of fiscal 2012 as compared to fiscal 2011 and effective marketing in the first ~~six~~nine months of fiscal 2012. Our Continental European meetings business, which benefited from new marketing strategies, also contributed to revenue ~~growth.~~growth on a constant currency basis. This revenue growth in our Continental European meetings business was ~~almost completely~~more than offset by revenue declines in the NACO and UK meetings businesses as they cycled against the momentum of their new program ~~launches in late fiscal 2010~~innovations, and ~~strong~~stronger and more effective marketing and public relations efforts, in the first ~~six~~nine months of fiscal 2011. In addition, in the first ~~six~~nine months of fiscal 2012, meeting revenues were negatively impacted by the execution challenges associated

with introducing the Monthly Pass commitment plan to NACO’s small accounts portion of its corporate business in the first quarter of fiscal 2012, as well as ~~an ineffective advertising campaign~~by macro-economic factors, particularly consumer confidence, in ~~our UK meetings business.~~NACO and the United Kingdom.

The combination of the above factors ~~which negatively impacted meeting revenues in the period~~also led to a ~~4.8%~~4.6% decline in global meeting paid weeks in the first ~~six~~nine months of fiscal 2012 versus the prior year period. However, with the benefits of starting the fiscal year with a higher active Online subscriber base and effective marketing, WeightWatchers.com experienced growth of ~~32.7%~~29.5% in Online paid weeks, as well as a ~~26.4%~~19.5% increase in end of period active Online subscribers, in the first ~~six~~nine months of fiscal 2012 versus the prior year period. The increase in Online paid weeks more than offset the decline in meeting paid weeks, which resulted in ~~an 11.6%~~a 10.7% increase in global paid weeks in the first ~~six~~nine months of fiscal 2012 versus the prior year period. Global attendance in the first ~~six~~nine months of fiscal 2012 declined 10.2% in comparison to the first ~~six~~nine months of fiscal 2011.

Gross profit for the first ~~six~~nine months of fiscal 2012 of ~~$581.9~~$837.7 million increased ~~$11.6~~$16.2 million, or 2.0%, from ~~$570.3~~$821.5 million in the first ~~six~~nine months of fiscal 2011. Excluding the impact of foreign currency, which negatively impacted gross profit for the first nine months of fiscal 2012 by $13.8 million, gross profit in the first nine months of fiscal 2012 increased by $30.1 million, or 3.7%, versus the prior year period. Operating income for the first ~~six~~nine months of fiscal 2012 was ~~$256.3~~$388.3 million, a decrease of ~~$34.8~~$41.1 million, or ~~11.9%~~9.6%, from ~~$291.1~~$429.4 million in the first ~~six~~nine months of fiscal 2011. Excluding the impact of foreign currency, which negatively impacted operating income for the ~~six~~first nine months of fiscal 2012 by ~~$3.6~~$6.8 million, operating income in the first ~~six~~nine months of fiscal 2012 decreased by ~~$31.2~~$34.3 million, or ~~10.7%~~8.0%, versus the prior year period. This decline was primarily the result of an increase in marketing investments and selling, general and administrative expenses in the first nine months of fiscal 2012 versus the prior year period. Our gross margin in the first ~~six~~nine months of fiscal 2012 increased to ~~58.9%~~59.0% from ~~57.6%~~57.9% in the first ~~six~~nine months of fiscal 2011, but operating income margin in the first ~~six~~nine months of fiscal 2012 declined to ~~25.9%~~27.4% from ~~29.4%~~30.3% in the first ~~six~~nine months of fiscal 2011. See “—Components of Expenses and Margins” for additional details.

Net income attributable to the Company in the first ~~six~~nine months of fiscal 2012 declined ~~17.7%~~17.3% from ~~$160.6~~$241.2 million in the first ~~six~~nine months of fiscal 2011 to ~~$132.1~~$199.4 million. ~~This decline was primarily~~In addition to the ~~result of marketing investments in the first six months of fiscal 2012 causing a~~ decline in operating income, ~~in the first six months of fiscal 2012 versus the prior year period. In addition,~~ higher interest expense resulting from our financing of our repurchase of shares in the Tender Offer and related share repurchase from Artal Holdings, ~~and~~ the write-off of an investment and a higher tax rate, primarily resulting from the tax benefit associated with the closure of our Finland business in the third quarter of fiscal 2011, further reduced net income in the first ~~six~~nine months of fiscal 2012.

Earnings per fully diluted share in the first ~~six~~nine months of fiscal 2012 were ~~$2.01,~~$3.19, a decrease of ~~$0.16~~$0.07 from ~~$2.17~~$3.26 in the first ~~six~~nine months of fiscal 2011. Earnings per fully diluted share in the second ~~quarter~~and third quarters of fiscal 2012 benefited from our repurchase of shares in the Tender Offer and the related share repurchase from Artal Holdings as our weighted average diluted shares outstanding decreased to ~~65.7~~62.5 million from ~~74.1~~74.0 million in the prior year period. See “—Liquidity and Capital Resources—Dividends and Stock Transactions” for a description of the Tender Offer and related share repurchase from Artal Holdings.

Global meeting fees for the first ~~six~~nine months of fiscal 2012 were ~~$501.0~~$724.2 million, a decrease of ~~$37.5~~$47.7 million, or ~~7.0%~~6.2%, from ~~$538.5~~$771.9 million in the prior year period. Excluding the impact of foreign currency, which decreased our global meeting fees for the first ~~six~~nine months of fiscal 2012 by ~~$7.5~~$12.1 million, global meeting fees in the first ~~six~~nine months of fiscal 2012 decreased by ~~5.6%~~4.6% versus the prior year period. The decline in meeting fees was driven by a ~~4.8%~~4.6% decline in global meeting paid weeks in the first ~~six~~nine months of fiscal 2012 to ~~53.4~~77.3 million from ~~56.2~~81.1 million in the prior year period. The decline in meeting paid

weeks was driven by lower enrollments in the first ~~six~~nine months of fiscal 2012 as compared to the

historically high enrollment levels in the prior year period. However, the impact of enrollments on meeting paid weeks was minimized by the higher meeting membership base at the beginning of fiscal 2012 versus the beginning of fiscal 2011. Global attendance decreased 10.2% to ~~29.7~~41.0 million in the first ~~six~~nine months of fiscal 2012 from ~~33.0~~45.6 million in the first ~~six~~nine months of fiscal 2011.

In NACO, meeting fees in the first ~~six~~nine months of fiscal 2012 were ~~$348.5~~$506.2 million, a decrease of ~~$25.2~~$28.7 million, or ~~6.8%~~5.4%, from ~~$373.7~~$534.9 million in the first ~~six~~nine months of fiscal 2011. The decline in meeting fees was driven primarily by a ~~5.7%~~5.1% decline in NACO meeting paid weeks from ~~37.4~~54.0 million in the first ~~six~~nine months of fiscal 2011 to ~~35.2~~51.2 million in the first ~~six~~nine months of fiscal 2012. The decline in meeting paid weeks ~~in the first six months of fiscal 2012~~ primarily resulted from lower enrollments in the first ~~six~~nine months of fiscal 2012 as compared to the historically high enrollment levels in the prior year period. Lower enrollments in the first ~~six~~nine months of fiscal 2012 were driven in part by the execution challenges associated with introducing Monthly Pass to the small accounts portion of NACO’s corporate business. However, the impact of enrollments on meeting paid weeks was minimized by the higher meeting membership base at the beginning of fiscal 2012 versus the beginning of fiscal 2011. In the first ~~six~~nine months of fiscal 2012, NACO attendance decreased ~~11.0%~~10.6% to ~~18.6~~25.7 million from ~~20.9~~28.8 million in the first ~~six~~nine months of fiscal 2011.

International meeting fees in the first ~~six~~nine months of fiscal 2012 were ~~$152.5~~$218.0 million, a decrease of ~~$12.3~~$19.0 million, or ~~7.4%~~8.0%, from ~~$164.8~~$237.0 million in the prior year period. Excluding the impact of foreign currency, which decreased international meeting fees for the first ~~six~~nine months of fiscal 2012 by ~~$6.7~~$11.2 million, international meeting fees declined by ~~3.4%~~3.3% in the first ~~six~~nine months of fiscal 2012 versus the prior year period. ~~The decline in~~First nine months fiscal 2012 meeting fees ~~was~~were driven by a ~~3.1%~~3.8% decline in international meeting paid weeks in the ~~first six months of fiscal 2012~~period versus the prior year period. ~~The decline~~Meeting paid weeks performance in ~~meeting paid weeks~~the first nine months of fiscal 2012 was driven by declines in enrollments in our international English-speaking markets in the ~~first six months of fiscal 2012~~period versus the prior year period, which were partially offset by enrollment growth in Continental Europe. International attendance decreased by ~~8.8%~~9.5% in the first ~~six~~nine months of fiscal 2012 versus the prior year period.

In the first ~~six~~nine months of fiscal 2012, UK meeting fees decreased by ~~11.8%~~12.5% to ~~$55.6~~$80.9 million from ~~$63.0~~$92.5 million in the first ~~six~~nine months of fiscal 2011. Excluding the impact of foreign currency, which decreased UK meeting fees for the first ~~six~~nine months of fiscal 2012 by ~~$1.4~~$1.9 million, UK meeting fees declined by ~~9.6%~~10.5% in the first ~~six~~nine months of fiscal 2012 versus the prior year period. ~~The decline in~~First nine months fiscal 2012 meeting fees ~~was~~were driven lower primarily by a decline of ~~7.9%~~9.4% in UK meeting paid weeks in the ~~first six months of fiscal 2012~~period versus the prior year period. ~~The decline~~Meeting paid weeks performance in ~~meeting paid weeks~~the first nine months of fiscal 2012 was driven by lower enrollments in the ~~first six months of fiscal 2012~~period as compared to the historically high enrollment levels in the prior year period. In addition, in the first ~~six~~nine months of fiscal 2012, the United Kingdom introduced an advertising campaign that was ineffective in driving enrollment growth. Weak macro-economic trends in the United Kingdom also contributed to the decline in enrollments. However, the impact of enrollments on meeting paid weeks was minimized by the higher meeting membership base at the beginning of fiscal 2012 versus the beginning of fiscal 2011. UK attendance decreased by ~~14.3%~~15.2% in the first ~~six~~nine months of fiscal 2012 versus the prior year period.

Meeting fees in Continental Europe decreased ~~1.7%~~1.5% to ~~$74.2~~$104.8 million in the first ~~six~~nine months of fiscal 2012 from ~~$75.5~~$106.4 million in the first ~~six~~nine months of fiscal 2011. Excluding the impact of foreign currency, which decreased Continental European meeting fees for the first ~~six~~nine months of fiscal 2012 by ~~$5.4~~$9.2 million, Continental European meeting fees increased by ~~5.4%~~7.2% in the first ~~six~~nine months of fiscal 2012 as compared to the prior year period. The increase in meeting fees on a constant currency basis was driven by an increase of ~~8.2%~~9.3% in Continental European meeting paid weeks in the first ~~six~~nine months of fiscal 2012 versus the prior year period. The increase in meeting paid weeks was driven by higher enrollments in the first ~~six~~nine months of fiscal 2012 as compared to the prior year period. These higher enrollments were the result of effective new marketing strategies in this region. In Continental Europe, attendance increased by ~~3.5%~~3.9% in the first ~~six~~nine months of fiscal 2012 versus the prior year period.

Global in-meeting product sales for the first ~~six~~nine months of fiscal 2012 were ~~$151.7~~$206.3 million, a decrease of ~~$22.0~~$28.6 million, or ~~12.7%~~12.2%, from ~~$173.6~~$234.9 million in the first ~~six~~nine months of fiscal 2011. Excluding the impact of foreign currency, which decreased in-meeting product sales for the first ~~six~~nine months of fiscal 2012 by ~~$2.9~~$4.3 million, global in-meeting product sales in the first ~~six~~nine months of fiscal 2012 declined ~~11.0%~~10.3% versus the prior year period. This decrease resulted primarily from a 10.2% decline in global meeting attendance in the first ~~six~~nine months of fiscal 2012 versus the prior year period. In addition, lower product sales per attendee in the first ~~six~~nine months of fiscal 2012 versus the prior year period drove the balance of the decline. On a per attendee basis, the first ~~six~~nine months of fiscal 2012 global in-meeting product sales decreased ~~2.7%~~2.2%, or ~~0.9%~~0.2% on a constant currency basis, versus the prior year period. This decrease in in-meeting product sales per attendee in the first ~~six~~nine months of fiscal 2012 was primarily the result of cycling against abnormally strong first quarter fiscal 2011 sales of enrollment products in connection with the launch of the new programs in our English-speaking markets in late fiscal 2010.

In NACO, first ~~six~~nine months fiscal 2012 in-meeting product sales of ~~$85.9~~$117.9 million decreased by ~~$11.4~~$13.6 million, or ~~11.7%~~10.4%, versus the prior year period. This decrease resulted primarily from ~~an 11.0%~~a 10.6% attendance decline in the first ~~six~~nine months of fiscal 2012 as compared to the prior year period. ~~A decline in in-meeting~~In-meeting product sales per attendee ~~of 0.8%~~increased slightly by 0.2%, or 0.4% on a constant currency basis, in the first ~~six~~nine months of fiscal 2012 ~~as compared to~~versus the prior year period ~~also contributed to this decrease.~~as sales of consumables and new product categories offset the decline in sales of enrollment products.

International in-meeting product sales were ~~$65.7~~$88.4 million in the first ~~six~~nine months of fiscal 2012, a decrease of ~~13.9%~~14.5%, or ~~10.4%~~10.5% on a constant currency basis, versus the prior year period. This decrease was driven primarily by an attendance decline of ~~8.8%~~9.5% in the first ~~six~~nine months of fiscal 2012 as compared to the first ~~six~~nine months of fiscal ~~2011.~~2011, which was largely driven by the United Kingdom. In addition, in-meeting product sales per attendee ~~of $5.93~~ in the first ~~six~~nine months of fiscal 2012 declined by ~~5.6%~~5.5%, or ~~1.7%~~1.1% on a constant currency basis, as compared to the prior year period.

Internet revenues, which include subscription revenues from sales of our Weight Watchers Online and Weight Watchers eTools products as well as Internet advertising revenues, increased ~~$64.9~~$87.2 million, or ~~32.8%~~29.1%, to ~~$262.5~~$386.8 million in the first ~~six~~nine months of fiscal 2012 from ~~$197.6~~$299.5 million in the first ~~six~~nine months of fiscal 2011. Excluding the impact of foreign currency, which decreased Internet revenues for the first ~~six~~nine months of fiscal 2012 by ~~$3.5~~$5.9 million, Internet revenues grew by ~~34.6%~~31.1% in the first ~~six~~nine months of fiscal 2012 versus the prior year period. The combination of a higher active Online subscriber base at the start of fiscal 2012, up 50.5%, versus the beginning of fiscal ~~year~~ 2011 and effective marketing campaigns in North America and Continental Europe contributed to Online paid weeks growth of ~~32.7%~~29.5% in the first ~~six~~nine months of fiscal 2012 versus the prior year period. Additionally, end of period active Online subscribers increased by ~~26.4%~~19.5% to ~~2.3~~2.1 million at the end of the first ~~six~~nine months of fiscal 2012 as compared to ~~1.8~~1.7 million at the end of the first ~~six~~nine months of fiscal 2011.

English-speaking markets in late fiscal 2010. Global licensing revenues increased by ~~5.9%~~3.3%, or ~~7.6%~~5.2% on a constant currency basis, in the first ~~six~~nine months of fiscal 2012 versus the prior year period. A one-time

termination fee in the second quarter of fiscal 2012 which was included in licensing revenues accounted for almost all of the increase. Excluding this one-time termination fee of $2.0 million from licensing revenues, global licensing revenues in the first ~~six~~nine months of fiscal 2012 ~~declined 0.5%~~decreased 1.1% versus the prior year period.

Total cost of revenues in the first ~~six~~nine months of fiscal 2012 was ~~$406.4~~$581.2 million, a decrease of ~~$12.8~~$15.2 million, or ~~3.0%~~2.6%, from ~~$419.2~~$596.4 million in the prior year period. Cost of revenues declined at a faster pace than revenues due to the shift of revenue towards the higher margin WeightWatchers.com business. Gross profit for the first ~~six~~nine months of fiscal 2012 of ~~$581.9~~$837.7 million increased ~~$11.6~~$16.2 million, or 2.0%, from ~~$570.3~~$821.5 million in the first ~~six~~nine months of fiscal 2011. Gross margin in the first ~~six~~nine months of fiscal 2012 was ~~58.9%~~59.0%, as compared to ~~57.6%~~57.9% in the first ~~six~~nine months of fiscal 2011. Gross margin expansion was primarily the result of the shift of revenue towards the higher margin WeightWatchers.com business. This margin expansion was partially offset by a decline in the meetings business gross margin. This decline in the meetings business gross margin was primarily driven by the impact of higher costs associated with our future growth initiatives and lower average number of members per meeting.

Marketing expenses for the first ~~six~~nine months of fiscal 2012 were ~~$214.1~~$280.0 million, an increase of ~~$43.3~~$47.6 million, or ~~25.3%~~20.5%, versus the first ~~six~~nine months of fiscal 2011. Excluding the impact of foreign currency, which decreased marketing expenses for the first ~~six~~nine months of fiscal 2012 by ~~$3.4~~$4.5 million, marketing expenses were ~~27.3%~~22.4% higher in the first ~~six~~nine months of fiscal 2012 compared to the prior year period. Included in our first ~~six~~nine months of fiscal 2012 marketing expenses were investments in two ~~strategic~~ initiatives: ~~the~~ first time Online TV marketing campaigns in several of our international markets, and investment in marketing the Weight Watchers Online product to men in the United States to build awareness of and communicate the relevance of the Weight Watchers brand to the male demographic; and the second, first time Online TV marketing campaigns in several of our international markets.States. In addition, we invested in TV advertising for Continental Europe’s meetings business, which also contributed to the increase in marketing expenses in the first ~~six~~nine months of fiscal 2012. The increase in marketing expenses also reflected the impact of higher volumes on online advertising costs. Marketing expenses as a percentage of revenue were ~~21.7%~~19.7% in the first ~~six~~nine months of fiscal 2012 as compared to ~~17.3%~~16.4% in the prior year period.

Selling, general and administrative expenses were ~~$111.5~~$169.5 million for the first ~~six~~nine months of fiscal 2012 versus ~~$108.4~~$159.8 million for the first ~~six~~nine months of fiscal 2011, an increase of ~~$3.1~~$9.7 million, or ~~2.9%~~6.1%. Excluding the impact of foreign currency, which decreased selling, general and administrative expenses for the first ~~six~~nine months of fiscal 2012 by ~~$1.5~~$2.5 million, first ~~six~~nine months of fiscal 2012 selling, general and administrative expenses increased by ~~4.2%~~7.6% versus the first ~~six~~nine months of fiscal 2011. The increase in expenses was primarily related to investments in growth initiatives, including NACO’s corporate business, technology for the development of our mobile and customer relationship management platforms and additions to staff in support of ~~business development.~~these initiatives. Lower bonus expense ~~accruals~~globally related to business performance partially offset ~~the~~this increase. Selling, general and administrative expenses as a percentage of revenue for the first ~~six~~nine months of fiscal 2012 increased to ~~11.3%~~11.9% from ~~11.0%~~11.3% for the first ~~six~~nine months of fiscal 2011.

Our operating income margin in the first ~~six~~nine months of fiscal 2012 decreased to ~~25.9%~~27.4%, a decrease of ~~350 basis points~~2.9% from ~~29.4%~~30.3% in the first ~~six~~nine months of fiscal 2011. The decline in operating income margin was primarily driven by

costs related to first time Online TV marketing campaigns in several of our international markets and our significant investment in marketing the Weight Watchers Online product to men in the United ~~States and costs related to first time Online TV marketing campaigns in several of our international markets in the first six months of fiscal 2012.~~States. Both marketing expenses and selling, general and administrative expenses increased as a percentage of revenue in the first ~~six~~nine months of fiscal 2012 as compared to the prior year period.

Interest expense was ~~$36.9~~$60.1 million for the first ~~six~~nine months of fiscal 2012, an increase of ~~$3.7~~$13.3 million, or ~~11.3%~~28.4%, from ~~$33.2~~$46.8 million in the first ~~six~~nine months of fiscal 2011. The increase was primarily driven by higher interest rates on our debt and an increase in our average debt outstanding. The effective interest rate on our debt increased by ~~0.69%~~0.73% to ~~2.84%~~2.87% in the first ~~six~~nine months of fiscal 2012 from ~~2.15%~~2.14% in the first ~~six~~nine months of fiscal 2011. Our average debt outstanding increased by ~~$490.1~~$770.7 million to ~~$1,765.2~~$1,995.7 million in the first ~~six~~nine months of fiscal 2012 from ~~$1,275.1~~$1,225.0 million in the first ~~six~~nine months of fiscal 2011. The increase in average debt outstanding was driven by the additional borrowings under the WWI Credit Facility (defined below) in connection with our repurchase of shares in the Tender Offer and the related share repurchase from Artal Holdings (see “—Liquidity and Capital Resources—Dividends and Stock Transactions”). Interest expense was partially offset by a decrease in the notional value and interest rates of our interest rate swaps, which resulted in a lower effective interest rate of ~~3.78%~~3.64% in the first ~~six~~nine months of fiscal 2012, as compared to ~~4.76%~~4.66% in the first ~~six~~nine months of fiscal 2011.

The Company incurred ~~$3.3~~$2.5 million of other expense in the first ~~six~~nine months of fiscal 2012 as compared to ~~$0.2~~$0.1 million of other ~~income~~expense in the prior year period, primarily reflecting the write-off associated with an investment and the impact of foreign currency on intercompany transactions.

In the first ~~six~~nine months of fiscal 2012, we wrote-off $1.3 million of fees in connection with the refinancing of our debt, which we recorded as an early extinguishment of debt charge.

Our effective tax rate was 38.5% for the first ~~six~~nine months of fiscal 2012 as compared to ~~38.0%~~37.1% for the first ~~six~~nine months of fiscal 2011. The difference in period-over-period effective tax rates is primarily the result of the ~~reversal~~tax benefit associated with the closure of ~~certain tax reserves due~~our Finland business in the third quarter of fiscal 2011.

The impact of Hurricane Sandy and its aftermath is expected to negatively impact our paid weeks, attendance, revenue and net income in the ~~expiration~~fourth quarter of ~~the applicable statutes of limitations.~~fiscal 2012.

Cash and cash equivalents were ~~$90.9~~$80.6 million at the end of the ~~second~~third quarter of fiscal 2012, an increase of ~~$43.4~~$33.1 million from the end of fiscal 2011. Cash flows provided by operating activities for the first ~~six~~nine months of fiscal 2012 were ~~$180.3~~$301.2 million, a decrease of ~~$74.7~~$73.7 million, or ~~29.3%~~19.7%, from the ~~$255.0~~$374.9 million generated in the first ~~six~~nine months of fiscal 2011. This decrease was primarily the result of ~~$43.3 million of additional marketing expenses~~lower net income in the first ~~six~~nine months of fiscal 2012 versus the prior year period and a payment of $30.0 million to Her Majesty’s Revenue and Customs, which was previously recorded as part of a reserve by the Company in the fourth quarter of fiscal 2009, in connection with the UK self-employment matter. See Part II, Item 1. “Legal Proceedings—UK Self-Employment Matter” for additional details on this matter.

The ~~$180.3~~$301.2 million of cash flows provided by operating activities for the first ~~six~~nine months of fiscal 2012 exceeded the period’s net income attributable to the Company by ~~$48.2~~$101.7 million. The excess of cash flows provided by operating activities over net income arose primarily from changes in our working capital, as described below (see “—Balance Sheet Working Capital”), non-cash expenses and differences between book and cash taxes.

Net cash used for investing and financing activities combined totaled ~~$136.5~~$257.2 million in the first ~~six~~nine months of fiscal 2012. Net cash used for investing activities was ~~$38.3~~$71.6 million in the first ~~six~~nine months of fiscal 2012 ~~consisting primarily~~and consisted of the following: capital expenditures in connection with our retail ~~initiative and~~initiative; capitalized software expenditures to support global systems ~~initiatives.~~initiatives; and the purchase price paid in

connection with our acquisition of substantially all of the assets of our Southeastern Ontario and Ottawa, Canada, franchisee. Net cash used for financing activities totaled ~~$98.2~~$185.5 million in the period and included stock repurchases of $1.5 billion and deferred financing costs of ~~$25.4~~$25.5 million, partially offset by proceeds from new term loans under the WWI Credit Facility of $1.45 billion in connection with the Tender Offer and related Artal Holdings share ~~repurchase as well as additional borrowings under our revolving credit facilities of $41.0 million.~~repurchase. See “—Dividends and Stock Transactions” for a description of the Tender Offer and the related Artal Holdings share repurchase. In addition, we made long-term debt payments of ~~$48.4~~$86.6 million and dividend payments of ~~$22.7~~$32.5 million, and received ~~$9.4~~$13.9 million of proceeds from stock options exercised, in the first ~~six~~nine months of fiscal 2012.

Cash and cash equivalents were ~~$60.4~~$61.4 million at the end of the ~~second~~third quarter of fiscal 2011, an increase of ~~$19.8~~$20.9 million from the end of fiscal 2010. Cash flows provided by operating activities for the first ~~six~~nine months of fiscal 2011 were ~~$255.0~~$374.9 million, an increase of ~~$110.6~~$140.0 million, or ~~76.6%~~59.6%, over the ~~$144.4~~$234.9 million generated in the first ~~six~~nine months of fiscal 2010. The increase of ~~$110.6~~$140.0 million in cash flows provided by operating activities was primarily the result of improvements in ~~the~~our business in the first ~~six~~nine months of fiscal 2011 versus the comparable prior year period. These business improvements included a ~~$59.7~~$95.9 million increase in net income, and ~~$22.5~~$16.5 million of higher deferred income resulting from significant increases in Online subscribers and Monthly Pass members. In addition, in the first ~~six~~nine months of fiscal 2010, there was a $29.1 million payment made which reduced cash flows provided by operating activities in that period. The payment reduced a previously recorded UK value added tax, or VAT, accrual which covered prior periods, and which was made in connection with our previously disclosed adverse UK VAT ruling.

The ~~$255.0~~$374.9 million of cash flows provided by operating activities for the first ~~six~~nine months of fiscal 2011 exceeded net income attributable to the Company by ~~$94.4~~$133.7 million. The excess of cash flows provided by operating activities over net income arose primarily from changes in our working capital, and from non-cash expenses and differences between book and cash taxes.

Net cash used for investing and financing activities combined totaled ~~$237.4~~$354.9 million in the first ~~six~~nine months of fiscal 2011. Net cash used for investing activities was ~~$20.4~~$31.0 million in the first ~~six~~nine months of fiscal 2011, consisting primarily of capital expenditures and capitalized software expenditures. Net cash used for financing activities totaled ~~$217.0~~$323.9 million in the period and consisted primarily of long-term debt payments of ~~$202.3~~$298.3 million, stock repurchases of $34.9 million and dividend payments of ~~$25.9~~$38.7 million. These uses were partially offset by ~~$41.1~~$41.4 million of proceeds from stock options exercised in the first ~~six~~nine months of fiscal 2011.

On our balance sheet at ~~June 30,~~September 29, 2012, the working capital deficit was ~~$259.9~~$274.0 million, ~~including $90.9~~which included $80.6 million of cash and cash equivalents and ~~$152.9~~$133.8 million of current portion of long-term debt. At December 31, 2011, our working capital deficit was $279.7 million, which included $47.5 million of cash and cash equivalents and $124.9 million of current portion of long-term debt. After making scheduled debt repayments of ~~$48.4~~$86.6 million during the first ~~six~~nine months of fiscal 2012, and despite the borrowings that we undertook in March and April 2012, the current portion of our long-term debt increased only by ~~$28.0~~$8.9 million versus the end of fiscal 2011 as described below (see “—Long-Term Debt”). Excluding the changes in cash and cash equivalents and current portion of long-term debt from both periods, the working capital deficit at ~~June 30,~~September 29, 2012 ~~decreased~~increased by ~~$4.4~~$18.6 million to ~~$197.8~~$220.8 million from $202.2 million at December 31, 2011.

The ~~decrease~~increase of ~~$4.4~~$18.6 million in adjusted working capital deficit (which excludes from working capital the changes in cash and cash equivalents and in the current portion of long-term debt) in the first ~~six~~nine months of fiscal 2012 versus the December 31, 2011 level was primarily attributable to operational items. Operational items increased the deficit by ~~$45.6~~$61.2 million. These operational items included a ~~$28.6~~$20.4 million increase in deferred revenue from growth in our Online subscriber and Monthly Pass member bases, seasonality-related reductions of ~~$13.1~~$13.3 million in inventory, and a ~~$4.5~~$6.2 million decrease in

accounts receivable ~~partially offset by~~plus a ~~$0.6~~$21.3 million ~~decrease~~increase in accrued liabilities. These increases in working capital deficit were ~~almost fully~~partially offset by a ~~$29.4~~$6.0 million decrease in income tax liabilities, primarily related to the timing of income tax payments, a $29.0 million decline in the UK self-employment liability related to payments made in the first quarter of fiscal 2012 ~~$15.2 million net increase in prepaid and deferred income taxes, primarily related to the timing income tax payments,~~ and a ~~$5.4~~$7.6 million decline in the derivative liability.

Our credit facilities consist of certain term loan facilities and revolving credit facilities, which we refer to collectively as the WWI Credit Facility. During the first quarter of fiscal 2012, the composition of the WWI Credit Facility changed as a result of our amending and restating the WWI Credit Facility to, among other things, extend the maturity of certain of our term loan facilities and our revolving credit facility and to obtain new commitments for the borrowing of an additional $1,449.4 million of term loans to finance the purchases of shares of our common stock in the Tender Offer and from Artal ~~Holdings.~~Holdings pursuant to the Purchase Agreement.

Immediately prior to the amendment of the WWI Credit Facility, the term loan facilities consisted of a tranche A-1 loan, or Term A-1 Loan, a tranche B loan, or Term B Loan, a tranche C loan, or Term C Loan, and a tranche D loan, or Term D Loan, and a revolving credit facility, or Revolver A-1. The aggregate principal amount then outstanding under (i) the Term A-1 Loan was $128.6 million, (ii) the Term B Loan was $237.5 million, (iii) the Term C Loan was $420.4 million and (iv) the Term D Loan was $238.2 million. Immediately prior to the amendment of the WWI Credit Facility, the Revolver A-1 had no loans outstanding under it, $1.0 million of issued but undrawn letters of credit and $331.6 million in available unused commitments thereunder.

Following the amendment of the WWI Credit Facility on March 15, 2012, (i) $33.1 million in aggregate principal amount of the Term A-1 Loan and $301.8 million in aggregate principal amount of the Term C Loan were converted into, and $849.4 million in aggregate principal amount of commitments to borrow new term loans were provided under, a new tranche E loan, or Term E Loan, (ii) $107.0 million in aggregate principal amount of the Term B Loan and $119.1 million in aggregate principal amount of the Term D Loan were converted into, and $600.0 million in aggregate principal amount of commitments to borrow new term loans were provided under, a new tranche F loan, or Term F Loan, and (iii) $262.0 million in aggregate principal amount of commitments under the Revolver A-1 were converted into a new revolving credit facility, or Revolver A-2. The loans outstanding under each term loan facility existing prior to the amendment of the WWI Credit Facility and the loans and commitments outstanding under the Revolver A-1, in each case that were not converted into the Term E Loan, the Term F Loan or the Revolver A-2, as applicable, continued to remain outstanding under the WWI Credit Facility as the Term A-1 Loan, the Term B Loan, the Term C Loan, the Term D Loan or the Revolver A-1, as applicable. In connection with this amendment, we incurred fees of approximately $25.4 million during the first quarter of fiscal 2012. On March 27, 2012, we borrowed an aggregate of $726.0 million under the Term E Loan and the Term F Loan to finance the purchase of shares in the Tender Offer and to pay a portion of the related fees and expenses. On April 9, 2012, we borrowed an aggregate of approximately $723.4 million under the Term E Loan to finance the purchase of shares from Artal Holdings. At ~~June 30,~~September 29, 2012, we had ~~$2,493.8~~$2,414.6 million outstanding under the WWI Credit Facility, ~~a combination~~consisting entirely of term loans and ~~amounts~~there were no loans outstanding under any of the ~~Revolver A-1 and the Revolver A-2.~~revolving credit facilities. In addition, at ~~June 30,~~September 29, 2012, the Revolver A-1 had $0.2 million in issued but undrawn letters of credit outstanding thereunder and ~~$61.7~~$70.5 million in available unused commitments thereunder and the Revolver A-2 had ~~$0.8~~$0.7 million in issued but undrawn letters of credit outstanding thereunder and ~~$228.9~~$261.3 million in available unused commitments thereunder.

At ~~June 30,~~September 29, 2012 and December 31, 2011, our debt consisted entirely of variable-rate instruments. Interest rate swaps were entered into to hedge a portion of the cash flow exposure associated with our variable-rate borrowings. The average interest rate on our debt, exclusive of the impact of swaps, was approximately ~~2.88%~~3.01% and 2.40% per annum at ~~June 30,~~September 29, 2012 and December 31, 2011, respectively.

The following schedule sets forth our long-term debt obligations at ~~June 30,~~September 29, 2012:


	Balance		Balance
Revolver A-1 Loan due June 30, 2014	$	8.7
Revolver A-2 Loan due March 15, 2017		32.3
Term A-1 Loan due January 26, 2013		76.5	$	57.3
Term B Loan due January 26, 2014		130.1		129.8
Term C Loan due June 30, 2015		117.0		115.4
Term D Loan due June 30, 2016		118.8		118.5
Term E Loan due March 15, 2017		1,184.3		1,169.5
Term F Loan due March 15, 2019		826.1		824.1

Total Debt		2,493.8		2,414.6
Less Current Portion		152.9		133.8

Total Long-Term Debt	$	2,340.9	$	2,280.8

The WWI Credit Facility provides that term loans and the loans outstanding under the Revolver A-1 and the Revolver A-2 bear interest at a rate per annum equal to either, at our option, the LIBO Rate (Reserve Adjusted) (as defined in the WWI Credit Facility agreement) plus an applicable margin or the Alternate Base Rate (as defined in the WWI Credit Facility agreement) plus an applicable margin, which applicable margins will vary depending on our Net Debt to EBITDA Ratio (as defined in the WWI Credit Facility agreement) from time to time in effect. At ~~June 30,~~September 29, 2012, the Term A-1 Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus ~~1.00%~~1.25% per annum; the Term B Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus 1.50% per annum; the Term C Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus 2.25% per annum; the Term D Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus 2.25% per annum; the Term E Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus ~~2.00%~~2.25% per annum; the Term F Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus ~~2.75%~~3.00% per annum; had any loans under the Revolver A-1 ~~bore~~been outstanding, they would have borne interest at a rate equal to LIBO Rate (Reserve Adjusted) plus 2.50% per annum; and had any loans under the Revolver A-2 ~~bore~~been outstanding, they would have borne interest at a rate equal to LIBO Rate (Reserve Adjusted) plus ~~2.00%~~2.25% per annum. For purposes of calculating the interest rate on the Term F Loan, the LIBO Rate (Reserve Adjusted) will always be at least 1.00% per annum. In addition to paying interest on outstanding principal under the WWI Credit Facility, we are required to pay an undrawn commitment fee to the lenders under each of the Revolver A-1 and the Revolver A-2 with respect to the unused commitments under each such facility at a rate that is dependent on our Net Debt to EBITDA Ratio from time to time in effect. As of ~~June 30,~~September 29, 2012, the applicable commitment fee rate for the Revolver A-1 was 0.50% per annum and for the Revolver A-2 was 0.40% per annum.

The WWI Credit Facility contains customary covenants including covenants that, in certain circumstances, restrict our ability to incur additional indebtedness, pay dividends on and redeem capital stock, make other payments, including investments, sell our assets and enter into consolidations, mergers and transfers of all or substantially all of our assets. The WWI Credit Facility also requires us to maintain specified financial ratios and satisfy certain financial condition tests. At ~~June 30,~~September 29, 2012, we were in compliance with all of the required financial ratios and also met all of the financial condition tests, and expect to continue to do so for the foreseeable future. The WWI Credit Facility contains customary events of default. Upon the occurrence of an event of default under the WWI Credit Facility, the lenders thereunder may cease making loans and declare amounts outstanding to be immediately due and payable. The WWI Credit Facility is guaranteed by certain of our existing and future subsidiaries. Substantially all of our assets secure the WWI Credit Facility.

The WWI Credit Facility allows us to make loan modification offers to all lenders of any tranche of term loans or revolving commitments to extend the maturity date of such loans and/or commitments and/or reduce or eliminate the scheduled amortization. Any such loan modifications would be effective only with respect to such tranche of term loans or revolving commitments and only with respect to those lenders that accept our offer. Loan modification offers may be accompanied by increased pricing and/or fees payable to accepting lenders. The WWI Credit Facility also allows for up to an additional $400.0 million of incremental financing through the creation of either new tranches of term loans or through an increase in commitments under the Revolver A-2, in each case to be provided to us under the WWI Credit Facility. The incremental capacity is uncommitted and we must find lenders to provide any such financing prior to incurrence. In addition, we may incur up to an additional $200.0 million of incremental term loans through the creation of a new tranche of term loans, provided that the aggregate principal amount of such new term loans cannot exceed the amount then outstanding under our existing revolving credit facilities and the proceeds from such new tranche of term loans must be used solely to repay certain outstanding revolving loans and permanently reduce the commitments of certain revolving lenders.

The following schedule sets forth our year-by-year debt obligations at ~~June 30,~~September 29, 2012:


Remainder of fiscal 2012	$	76.4	$	38.2
Fiscal 2013		114.7		114.7
Fiscal 2014		289.9		281.2
Fiscal 2015		227.3		227.3
Fiscal 2016		209.3		209.3
Thereafter		1,576.2		1,543.9

Total	$	2,493.8	$	2,414.6

We currently plan to meet our long-term debt obligations by using cash flows provided by operating activities and opportunistically using other means to repay or refinance our obligations as we determine appropriate. We believe that cash flows from operating activities, together with borrowings available under our revolving credit facilities, will be sufficient for the next 12 months to fund currently anticipated capital expenditure requirements, debt service requirements and working capital requirements.

We historically have issued a quarterly cash dividend of $0.175 per share of our common stock every quarter for the past several fiscal years. Any decision to declare and pay dividends in the future will be made at the discretion of our Board of Directors, after taking into account our financial results, capital requirements and other factors it may deem relevant. Our Board of Directors may decide at any time to increase or decrease the amount of dividends or discontinue the payment of dividends based on these factors. The WWI Credit Facility also contains restrictions on our ability to pay dividends on our common stock.

On October 9, 2003, our Board of Directors authorized and we announced a program to repurchase up to $250.0 million of our outstanding common stock. On each of June 13, 2005, May 25, 2006 and October 21, 2010, our Board of Directors authorized and we announced adding $250.0 million to this program. The repurchase program allows for shares to be purchased from time to time in the open market or through privately negotiated transactions. No shares will be purchased from Artal Holdings Sp. z o.o., Succursale de Luxembourg, or Artal Holdings, and its parents and subsidiaries under ~~the~~this program. The

repurchase program currently has no expiration date. During the ~~six~~nine months ended ~~June 30,~~September 29, 2012, the Company repurchased no shares of its common stock in the open market under this program. The

repurchase of shares of common stock under the Tender Offer and from Artal Holdings pursuant to the Purchase Agreement, as discussed further below, was not made pursuant to the repurchase program. During the ~~six~~nine months ended ~~July 2,~~October 1, 2011, the Company repurchased in its first quarter 0.8 million shares of its common stock in the open market under this program for a total cost of $31.6 million, and in its second ~~quarter~~and third quarters no shares of its common ~~stock.~~stock under this program.

On February 23, 2012, we commenced a “modified Dutch auction” tender offer for up to $720.0 million in value of our common stock at a purchase price not less than $72.00 and not greater than $83.00 per share, or the Tender Offer. Prior to the Tender Offer, on February 14, 2012, we entered into an agreement, or the Purchase Agreement, with Artal Holdings whereby Artal Holdings agreed to sell to us, at the same price as was determined in the Tender Offer, such number of its shares of our common stock that, upon the closing of this purchase after the completion of the Tender Offer, Artal Holdings’ percentage ownership in the outstanding shares of our common stock would be substantially equal to its level prior to the Tender Offer. Artal Holdings also agreed not to participate in the Tender Offer so that it would not affect the determination of the purchase price of the shares in the Tender Offer.

The Tender Offer expired at midnight, New York time, on March 22, 2012, and on March 28, 2012 we repurchased approximately 8.8 million shares at a purchase price of $82.00 per share. On April 9, 2012, we repurchased approximately 9.5 million of Artal Holdings’ shares at a purchase price of $82.00 per share pursuant to the Purchase Agreement. In March 2012, we amended and extended the WWI Credit Facility to finance these repurchases. See “—Long-Term Debt”.

The WWI Credit Facility provides that we are permitted to pay dividends and extraordinary dividends, as well as repurchase shares of our common stock, so long as we are not in default under the WWI Credit Facility agreement. However, payment of extraordinary dividends and stock repurchases shall not exceed $150.0 million in the aggregate in any fiscal year if net debt to EBITDA (as defined in the WWI Credit Facility agreement) is equal to or greater than 3.75:1 and an investment grade rating date (as defined in the WWI Credit Facility agreement) has not occurred. We currently do not expect this restriction to impair our ability to pay dividends or make stock repurchases, but it could do so in the future.

As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes, such as entities often referred to as structured finance or special purpose entities.

Our business is seasonal, with revenues generally decreasing at year end and during the summer months. Our operating income for the first half of the year is generally the strongest. Our advertising schedule supports the three key enrollment-generating seasons of the year: winter, spring and fall, with winter having the highest concentration of advertising spending. The timing of certain holidays, particularly Easter, which precedes the spring marketing campaign and occurs between March 22 and April 25, may affect our results of operations and the year-to-year comparability of our results. For example, in fiscal 2009, Easter fell on April 12, which means that our spring marketing campaign began in the second quarter of fiscal 2009 as opposed to beginning in the first quarter as it did in fiscal 2008. The introduction of Monthly Pass in the meetings business has resulted in less seasonality with regards to our meeting fee revenues because its revenues are amortized over the related subscription period. While WeightWatchers.com experiences seasonality similar to the meetings business in terms of new subscriber sign-ups, its revenue tends to be less seasonal because it amortizes subscription revenue over the related subscription period.

Corporate information and our press releases, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments thereto, are available free of charge on our website at www.weightwatchersinternational.com as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (i.e., generally the same day as the filing). Moreover, we also make available at that site the Section 16 reports filed electronically by our officers, directors and ~~10 percent~~10% shareholders. Usually these are publicly accessible no later than the business day following the filing. We use our website at www.weightwatchersinternational.com as a channel of distribution of material Company information. Financial and other material information regarding the Company is routinely posted on and accessible at our website. Our website and the information posted on it or connected to it shall not be deemed to be incorporated herein by reference.

The market risk disclosures appearing in “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” of our Annual Report on Form 10-K for fiscal 2011 have not changed from December 31, 2011, other than as described below.

As of ~~June 30,~~September 29, 2012, we had entered into interest rate swaps with notional amounts totaling ~~$697.8~~$640.5 million to hedge a portion of our variable rate debt. As of such date, ~~$1,796.0~~$1,774.1 million of our variable rate debt remained unhedged. Our interest rate swap that went effective on January 4, 2010 and terminates on January 27, 2014 had an initial notional amount of $425.0 million, which amount will fluctuate during the remainder of its term to a maximum of ~~$697.8~~$640.5 million. Based on the amount of our variable rate debt and interest swap agreements as of ~~June 30,~~September 29, 2012, a hypothetical 50 basis point increase or decrease in interest rates on our variable rate debt would increase or decrease our annual interest expense by approximately ~~$9.0~~$8.9 million. This change in market risk exposure from the end of fiscal 2011 was driven by the additional borrowings in connection with the ~~repurchase~~repurchases of shares of common stock under the Tender Offer and from Artal Holdings. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Dividends and Stock Transactions” for additional information on these share repurchases.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and ~~interim~~ principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our principal executive officer and ~~interim~~ principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation and subject to the foregoing, our principal executive officer and ~~interim~~ principal financial officer concluded that the design and operation of our disclosure controls and procedures are effective at the reasonable assurance level.

There was no change in our internal control over financial reporting that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

In July 2007, Her Majesty’s Revenue and Customs, or HMRC, issued to us notices of determination and decisions that, for the period April 2001 to April 2007, our leaders and certain other service providers in the United Kingdom should have been classified as employees for tax purposes and, as such, we should have withheld tax from the leaders and certain other service providers pursuant to the “Pay As You Earn,” or PAYE, and national insurance contributions, or NIC, collection rules and remitted such amounts to HMRC. HMRC also issued a claim to us in October 2008 in respect of NIC which corresponds to the prior notices of assessment with respect to PAYE previously raised by HMRC.

In September 2007, we appealed to the UK First Tier Tribunal (Tax Chamber) (formerly known as the UK VAT and Duties Tribunal), or the First Tier Tribunal, HMRC’s notices as to these classifications and against any amount of PAYE and NIC liability claimed to be owed by us. In February 2010, the First Tier Tribunal issued a ruling that our UK leaders should have been classified as employees for UK tax purposes and, as such, we should have withheld tax from our leaders pursuant to the PAYE and NIC collection rules for the period from April 2001 to April 2007 with respect to services performed by the leaders for us. We appealed the First Tier Tribunal’s adverse ruling to the UK Upper Tribunal (Tax and Chancery Chamber), or the Upper Tribunal, and in October 2011, the Upper Tribunal issued a ruling dismissing our appeal. In January 2012, we sought permission from the UK Court of Appeal to appeal the Upper Tribunal’s ruling, which the UK Court of Appeal refused in March 2012. In March 2012, we applied to the UK Court of Appeal for an oral hearing to seek permission to appeal to the UK Court of Appeal against the Upper Tribunal’s ruling. At the hearing in June 2012, the UK Court of Appeal granted us permission to appeal. A hearing date for the appeal has ~~not yet~~ been ~~set.~~set for January 2013.

In December 2011, HMRC’s claim in respect of NIC was amended to increase the claimed amount for the period April 2002 to April 2007 and include the interest accrued thereon through December 2011. In addition, in February 2012, HMRC asserted a claim in respect of PAYE for the period April 2007 to April 2011 similar to what it had claimed for the period April 2001 to April 2007. We are currently appealing this PAYE claim with the First Tier Tribunal and the First Tier Tribunal has directed that the appeal be stayed until following the decision of the UK Court of Appeal with respect to our appeal of the Upper Tribunal’s ruling.

In light of the First Tier Tribunal’s adverse ruling and in accordance with accounting guidance for contingencies, we recorded in the fourth quarter of fiscal 2009 a reserve for the period from April 2001 through the end of fiscal 2009, inclusive of estimated accrued interest. On a quarterly basis, beginning in the first quarter of fiscal 2010 and through the second quarter of fiscal 2011, we recorded a reserve for UK withholding taxes with respect to our UK leaders consistent with this ruling. The reserve at the end of the second quarter of fiscal 2011 equaled approximately $43.7 million in the aggregate based on the exchange rates at the end of fiscal 2011. As of the beginning of the third quarter of fiscal 2011, we ~~employ~~began employing our UK leaders and therefore have ceased recording any further reserves for this matter. In addition, we do not currently expect additional reserves will be required in connection with the December 2011 amended NIC claim and the February 2012 PAYE claim by HMRC, as reserves had previously been made for these amounts. In February 2012, we paid HMRC, on a without prejudice basis, a portion of the amount previously reserved equal to approximately $30.0 million based on the exchange rates at the payment date for estimated amounts claimed to be owed by us with respect to PAYE and interest thereon for the period April 2001 to July 2011. The reserve at the end of the ~~second~~third quarter of fiscal 2012 equaled approximately ~~$14.3~~$14.7 in the aggregate based on the exchange rates at the end of the ~~second~~third quarter of fiscal 2012.

~~Hanson-Kelly & Jackson v. Weight Watchers North America, Inc.~~ Although we disagree with the First Tier Tribunal’s adverse ruling and ~~Weight Watchers International, Inc.~~

~~In January 2010,~~believe we have valid grounds to obtain a ~~lawsuit was filed~~reversal on appeal, we are currently in ~~the U.S. District Court for the Middle District of North Carolina by two leaders alleging violations of certain federal and North Carolina wage and hour laws on behalf of themselves, and,~~discussions with HMRC to determine if ~~approved by the court, other leaders and receptionists in North Carolina since January 25, 2007. In~~ this matter can be settled prior to the plaintiffs sought unpaid wages and certain other damages. In April 2010, we filed a Motion to Dismiss the claim for unpaid wages under the North Carolina wage and hour laws. In February 2012, the parties engaged in mediation and reached an agreement in principle to resolve the case for a de minimis amount. The court approved the settlement agreement negotiated by the parties, and the case was dismissed with prejudice in April 2012.January 2013 appeal hearing date.

Due to the nature of our activities, we are also, at times, subject to pending and threatened legal actions that arise out of the ordinary course of business. In the opinion of management, based in part upon advice of legal counsel, the disposition of any such matters is not expected to have a material effect on our results of operations, financial condition or cash flows. However, the results of legal actions cannot be predicted with certainty. Therefore, it is possible that our results of operations, financial condition or cash flows could be materially adversely affected in any particular period by the unfavorable resolutions of one or more legal actions.

There have been no material changes in the risk factors from those detailed in our Annual Report on Form 10-K for fiscal 2011.

~~This table provides certain information with respect~~Nothing to ~~our purchases of shares of Weight Watchers International, Inc.’s common stock during the second quarter of fiscal 2012:~~report under this item.


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PART I -– FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Consolidated Balance Sheets at ~~June 30,~~September 29, 2012 and December 31, 2011		2

	Unaudited Consolidated Statements of Net Income for the three and ~~six~~nine months ended ~~June 30,~~September 29, 2012 and ~~July 2,~~October 1, 2011		3

	Unaudited Consolidated Statements of Comprehensive Income for the three and ~~six~~nine months ended ~~June 30,~~September 29, 2012 and ~~July 2,~~October 1, 2011		4

	Unaudited Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June 30,~~September 29, 2012 and ~~July 2,~~October 1, 2011		5

	Notes to Unaudited Consolidated Financial Statements		6

Cautionary Notice Regarding Forward-Looking Statements			17

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		37

Item 4.	Controls and Procedures		37

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings		38

Item 1A.	Risk Factors		39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		39

Item 3.	Defaults Upon Senior Securities		4039

Item 4.	Mine Safety Disclosures		4039

Item 5.	Other Information		4039

Item 6.	Exhibits		4039

Signatures

Exhibit Index


	Total Number of Shares Purchased			Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs			Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
April 1 – May 5		9,498,804	⁽¹⁾	$	82.00		9,498,804	⁽¹⁾	$	208,933,489	⁽²⁾
May 6 – June 2		—		$	—		—		$	208,933,489	⁽²⁾
June 3 – June 30		—		$	—		—		$	208,933,489	⁽²⁾

Total		9,498,804		$	82.00		9,498,804


Exhibit Number		Description

Exhibit 10.1		Second Amended and Restated Weight Watchers Executive Profit Sharing Plan, August 1, 2012

Exhibit 31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1		Certification pursuant to 18 U.S.C. Section 1350.

Exhibit 32.2		Certification pursuant to 18 U.S.C. Section 1350.

Exhibit 101
EX-101.INS EX-101.SCH EX-101.CAL EX-101.DEF EX-101.LAB EX-101.PRE		XBRL Instance Document XBRL Taxonomy Extension Schema XBRL Taxonomy Extension Calculation Linkbase XBRL Taxonomy Extension Definition Linkbase XBRL Taxonomy Extension Label Linkbase XBRL Taxonomy Extension Presentation Linkbase

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