UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 29, 2012~~March 30, 2013

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-16769

WEIGHT WATCHERS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Virginia

11-6040273

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

~~11 Madison~~675 Avenue 17of the Americas, 6^th Floor, New York, New York 10010

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 589-2700

11 Madison Avenue, 17^th Floor, New York, New York 10010

(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 ~~October 31, 2012~~April 30, 2013 was ~~55,652,763.~~55,893,058.

WEIGHT WATCHERS INTERNATIONAL, INC.

TABLE OF CONTENTS


		Page No.

PART I –- FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Consolidated Balance Sheets at ~~September~~March 30, 2013 and December 29, 2012 ~~and December 31, 2011~~		2

	Unaudited Consolidated Statements of Net Income for the three ~~and nine~~ months ended ~~September 29,~~March 30, 2013 and March 31, 2012 ~~and October 1, 2011~~		3

	Unaudited Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 29,~~March 30, 2013 and March 31, 2012 ~~and October 1, 2011~~		4

	Unaudited Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 29,~~March 30, 2013 and March 31, 2012 ~~and October 1, 2011~~		5

	Notes to Unaudited Consolidated Financial Statements		6

Cautionary Notice Regarding Forward-Looking Statements			1716

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		1817

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		3730

Item 4.	Controls and Procedures		3731

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings		3831

Item 1A.	Risk Factors		3931

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		3931

Item 3.	Defaults Upon Senior Securities		3931

Item 4.	Mine Safety Disclosures		3932

Item 5.	Other Information		3932

Item 6.	Exhibits		3933

Signatures

Exhibit Index

PART I –- FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS AT

(IN THOUSANDS)


	September 29, 2012			December 31, 2011			March 30, 2013			December 29, 2012
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	80,591		$	47,469		$	121,381		$	70,215
Receivables, net		40,936			47,175			42,318			37,363
Inventories, net		40,173			53,437			44,290			46,846
Prepaid income taxes		7,958			3,071			8,260			6,087
Deferred income taxes		24,498			24,612			21,813			21,757
Prepaid expenses and other current assets		30,736			38,762			35,749			35,699

TOTAL CURRENT ASSETS		224,892			214,526			273,811			217,967

Property and equipment, net		62,253			41,072			81,979			71,768
Franchise rights acquired		782,886			764,026			816,289			787,007
Goodwill		51,218			50,012			63,469			59,414
Trademarks and other intangible assets, net		44,894			37,461			51,079			52,480
Deferred financing costs, net		28,460			8,720			24,786			26,571
Other noncurrent assets		3,353			5,811			3,307			3,400

TOTAL ASSETS	$	1,197,956		$	1,121,628		$	1,314,720		$	1,218,607


LIABILITIES AND TOTAL DEFICIT
CURRENT LIABILITIES
Portion of long-term debt due within one year	$	133,808		$	124,933		$	204,197		$	114,695
Accounts payable		50,811			60,810			54,696			49,349
Dividend payable		9,955			13,145			10,059			289
Derivative payable		17,009			24,613			10,828			13,871
UK self-employment liability		14,707			43,671
Accrued liabilities		166,687			140,573			171,944			182,222
Income taxes payable		1,511			2,704			18,992			1,268
Deferred revenue		104,125			83,758			115,580			86,161

TOTAL CURRENT LIABILITIES		498,613			494,207			586,296			447,855

Long-term debt		2,280,786			926,868			2,195,824			2,291,669
Deferred income taxes		127,342			100,723			137,074			129,431
Other		11,649			9,596			16,239			15,111

TOTAL LIABILITIES		2,918,390			1,531,394			2,935,433			2,884,066

TOTAL DEFICIT
Common stock, $0 par value; 1,000,000 shares authorized; 111,988 shares issued		0			0			0			0
Treasury stock, at cost, 56,334 shares at September 29, 2012 and 38,389 shares at December 31, 2011		(3,285,575	)		(1,793,983	)
Treasury stock, at cost, 56,097 shares at March 30, 2013 and 56,234 shares at December 29, 2012								(3,276,802	)		(3,281,831	)
Retained earnings		1,553,654			1,378,616			1,641,666			1,603,513
Accumulated other comprehensive income		11,487			5,601			14,423			12,859

TOTAL DEFICIT		(1,720,434	)		(409,766	)		(1,620,713	)		(1,665,459	)

TOTAL LIABILITIES AND TOTAL DEFICIT	$	1,197,956		$	1,121,628		$	1,314,720		$	1,218,607

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

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF NET INCOME

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


										Three Months Ended
	Three Months Ended					Nine Months Ended				March 30,		March 31,
	September 29, 2012			October 1, 2011		September 29, 2012		October 1, 2011		2013		2012
Meeting fees, net	$	223,209		$	233,400	$	724,215	$	771,898	$	235,995	$	252,508
Product sales and other, net		83,157			93,132		307,899		346,442		110,174		124,082
Internet revenues		124,244			101,902		386,783		299,538		140,759		126,945

Revenues, net		430,610			428,434		1,418,897		1,417,878		486,928		503,535

Cost of meetings, products and other		159,056			162,861		533,469		555,095		188,021		199,444
Cost of Internet revenues		15,721			14,390		47,706		41,309		18,757		15,726

Cost of revenues		174,777			177,251		581,175		596,404		206,778		215,170

Gross profit		255,833			251,183		837,722		821,474		280,150		288,365

Marketing expenses		65,886			61,514		279,981		232,329		118,914		130,318
Selling, general and administrative expenses		57,963			51,370		169,475		159,786		58,117		55,273

Operating income		131,984			138,299		388,266		429,359		103,119		102,774

Interest expense		23,225			13,655		60,149		46,840		22,550		13,167
Other (income) expense, net		(756	)		285		2,531		40
Other expense (income), net											1,296		(509	)
Early extinguishment of debt		0			0		1,328		0		0		1,328

Income before income taxes		109,515			124,359		324,258		382,479		79,273		88,788

Provision for income taxes		42,151			43,709		124,827		141,796		30,520		34,183

Net income		67,364			80,650		199,431		240,683	$	48,753	$	54,605
Net loss attributable to the noncontrolling interest		0			0		0		523

Net income attributable to Weight Watchers International, Inc.	$	67,364		$	80,650	$	199,431	$	241,206


Earnings per share attributable to Weight Watchers International, Inc.
Earnings per share
Basic	$	1.21		$	1.10	$	3.23	$	3.29	$	0.87	$	0.74

Diluted	$	1.20		$	1.09	$	3.19	$	3.26	$	0.87	$	0.74

Weighted average common shares outstanding
Basic		55,635			73,567		61,828		73,265		55,801		73,343

Diluted		56,122			74,263		62,486		74,040		56,245		74,164

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

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

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN THOUSANDS)

   Three Months Ended Nine Months Ended
   September 29,    October 1, September 29,    October 1,
   2012    2011 2012    2011
Net income
   $ 67,364       $ 80,650    $ 199,431       $ 240,683
Other comprehensive income:

Foreign currency translation adjustments, net of tax^(a)
   1,243       (6,014 ) 1,018       (3,139 )
Current period changes in fair value of derivatives, net of tax^(b)
   1,167       1,021    4,866       6,511






Total other comprehensive income
   2,410       (4,993 ) 5,884       3,372






Comprehensive income
   69,774       75,657    205,315       244,055
Comprehensive loss attributable to the noncontrolling interest
   0       0    0       523






Comprehensive income attributable to Weight Watchers International, Inc.
   $ 69,774       $ 75,657    $ 205,315       $ 244,578

~~(a)~~

Net of tax benefit (provision) of $(795) and $3,846 for the three months ended September 29, 2012 and October 1, 2011, respectively, and $(651) and $2,007 for the nine months ended September 29, 2012 and October 1, 2011, respectively.

~~(b)~~

Net of tax provision of $(746) and $(653) for the three months ended September 29, 2012 and October 1, 2011, respectively, and $(3,111) and $(4,163) for the nine months ended September 29, 2012 and October 1, 2011, respectively.


	Three Months Ended
	March 30, 2013			March 31, 2012
Net income	$	48,753		$	54,605
Other comprehensive income:
Foreign currency translation adjustments, net of tax of $(10) and $(237), respectively		(33	)		212
Current period changes in fair value of derivatives, net of tax of $(1,021) and $(1,152), respectively		1,597			1,802

Total other comprehensive income		1,564			2,014

Comprehensive income	$	50,317		$	56,619

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

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)


	Nine Months Ended						Three Months Ended
	September 29, 2012			October 1, 2011			March 30, 2013			March 31, 2012
Operating activities:
Net income	$	199,431		$	240,683		$	48,753		$	54,605
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		26,681			22,818			10,486			8,639
Amortization of deferred financing costs		5,178			3,730			1,783			1,360
Share-based compensation expense		5,905			6,456			2,008			1,987
Deferred tax provision		22,621			23,935			6,719			8,278
Allowance for doubtful accounts		(430	)		1,606			4			250
Reserve for inventory obsolescence, other		8,245			10,771			2,374			2,725
Foreign currency exchange rate gain		(189	)		(622	)
Foreign currency exchange rate loss/(gain)								1,380			(766	)
Loss on disposal of assets		574			500			0			348
Loss on investment		2,697			735			0			253
Early extinguishment of debt		1,328			0			0			1,328
Other items, net		0			(631	)
Changes in cash due to:
Receivables		7,003			4,739			(5,536	)		2,213
Inventories		6,710			(7,040	)		190			6,004
Prepaid expenses		2,834			14,172			(2,939	)		4,445
Accounts payable		(10,173	)		(9,803	)		5,856			(11,663	)
UK self-employment liability		(30,018	)		2,931			(7,272	)		(30,018	)
Accrued liabilities		34,646			37,115			3,711			5,571
Deferred revenue		19,870			29,899			30,214			36,481
Income taxes		(1,748	)		(7,046	)		17,432			12,719

Cash provided by operating activities		301,165			374,948			115,163			104,759


Investing activities:
Capital expenditures		(35,585	)		(12,950	)		(17,915	)		(16,329	)
Capitalized software expenditures		(18,955	)		(17,526	)		(5,292	)		(4,607	)
Cash paid for acquisition		(17,000	)		0
Cash paid for acquisitions								(35,000	)		0
Other items, net		(81	)		(544	)		34			(46	)

Cash used for investing activities		(71,621	)		(31,020	)		(58,173	)		(20,982	)


Financing activities:
Proceeds from new term loans		1,449,397			0			0			726,000
Payments on long-term debt		(86,603	)		(298,285	)		(6,343	)		(27,012	)
Payment of dividends		(32,465	)		(38,745	)		(4	)		(13,012	)
Payments to acquire treasury stock		(1,504,208	)		(34,924	)		0			(724,316	)
Deferred financing costs		(25,542	)		0			0			(24,810	)
Proceeds from stock options exercised		10,863			41,428			2,590			8,049
Tax benefit of restricted stock units vested and stock options exercised		3,021			6,617			657			2,289

Cash used for financing activities		(185,537	)		(323,909	)		(3,100	)		(52,812	)


Effect of exchange rate changes on cash and cash equivalents and other		(10,885	)		868			(2,724	)		(52	)

Net increase in cash and cash equivalents		33,122			20,887			51,166			30,913
Cash and cash equivalents, beginning of period		47,469			40,534			70,215			53,199

Cash and cash equivalents, end of period	$	80,591		$	61,421		$	121,381		$	84,112

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

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1.	Basis of Presentation

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,~~2012, which includes additional information about the Company, its results of operations, its financial position and its cash flows.

2.	Summary of Significant Accounting Policies

Recently Issued Accounting Pronouncements:

In ~~July 2012,~~February 2013, the Financial Accounting Standards Board (the “FASB”) issued updated guidance on the ~~periodic testing~~reporting of ~~indefinite-lived intangible assets for impairment.~~amounts reclassified out of accumulated other comprehensive income. This guidance ~~allows~~requires companies to ~~first assess qualitative factors~~present either parenthetically on the face of the financial statements or in the notes, significant amounts reclassified from each component of accumulated other comprehensive income and the income statement line items affected by the reclassification. An entity would not need to ~~determine if it is more-likely-than-not~~show the income statement line item affected for certain components that ~~an indefinite-lived intangible asset might~~are not required to be ~~impaired and whether it is necessary~~reclassified in their entirety to ~~perform the quantitative impairment test required under current accounting standards.~~net income. This guidance is ~~applicable~~effective 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 impairedannual periods, 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~~interim periods within those periods, beginning after December 15, ~~2011, with early adoption permitted.~~2012. The Company adopted the provisions of this guidance in the first 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 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 2012,2013, and such adoption did not affect the consolidated financial position, results of operations or cash flows of the Company.

~~In May 2011,~~Reclassification:

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

Revisions:

As disclosed in the Company’s Annual Report on Form 10-K for fiscal 2012, prior to fiscal year ended December 29, 2012, the Company had included certain amounts due from third-party credit card companies within accounts receivable and other amounts within cash. The consolidated statement of cash flows for the fiscal period ended March 31, 2012 has been corrected to consistently include all such amounts within cash. The effect of the revision on the previously reported amounts was to reduce cash provided by operating activities by $1,229 and increase cash and cash equivalents beginning of period by $5,730. Separately, the Company identified a correction in the statement of cash flows for the fiscal period ended March 31, 2012 as it relates to foreign currency activity, resulting in a reclassification between accrued liabilities and effect of exchange rate changes on cash and cash equivalents and other in the amount of $4,766, which reduced cash provided by operating activities by a corresponding amount. These adjustments were not considered to be material individually or in the aggregate to previously issued ~~authoritative fair value guidance entitled “Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and~~financial statements. However, because of the significance of these adjustments, the Company revised its consolidated statement of cash flows for the fiscal period ended March 31, 2012. These revisions had no impact on the consolidated balance sheets, consolidated statements of income or consolidated statements of comprehensive income for the period.

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

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.

~~Reclassification:~~

~~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.~~2012.

3.	Acquisitions of Franchisees ~~and Minority Equity Interest in China Joint Venture~~

~~Acquisitions of Franchisees~~

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. During the first quarter of fiscal 2013 and the third ~~quarter~~and fourth quarters of fiscal 2012, the Company acquired certain assets of its ~~franchisee~~franchisees as outlined below. ~~Prior~~

On March 4, 2013, the Company acquired substantially all of the assets of its Alberta and Saskatchewan, Canada franchisees, Weight Watchers of Alberta Ltd. and Weight Watchers of Saskatchewan Ltd., for an aggregate purchase price of $35,000. The total purchase price has been preliminarily allocated to ~~this purchase, there had been no key~~ franchise ~~acquisitions since fiscal 2008.~~rights acquired ($30,545), goodwill ($4,175), customer relationship value ($473), inventory ($218), fixed assets ($182) and prepaid expenses ($3) offset by deferred revenue of $596.

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.~~$16,755 plus assumed liabilities of $245. The total purchase price has been ~~preliminarily~~ allocated to franchise rights acquired ($~~15,263)~~9,871), goodwill ($~~1,199)~~6,779), customer relationship value ($~~322)~~180), fixed assets ($~~121)~~81), inventory ($~~71)~~66) and prepaid expenses ($23).

On November 2, 2012, the Company acquired substantially all of the assets of its Adirondacks franchisee, Weight Watchers of the Adirondacks, Inc., for a purchase price of $3,400. The total purchase price has been allocated to franchise rights acquired ($2,216), goodwill ($1,156), customer relationship value ($37), inventory ($29) and ~~other current~~prepaid expenses ($10) offset by deferred revenue of $48.

On December 20, 2012, the Company acquired substantially all of the assets of its Memphis, Tennessee franchisee, Weight Watchers of the Mid-South, Inc., for a purchase price of $10,000. The total purchase price has been allocated to franchise rights acquired ($8,396), goodwill ($1,461), customer relationship value ($209), inventory ($35), receivables ($9) and fixed assets ($~~24). Due~~4) offset by deferred revenue of $114.

The acquisitions resulted in goodwill related to, among other things, expected synergies in operations. The Company expects that the ~~timing~~majority of ~~this acquisition,~~goodwill recorded in connection with the ~~purchase price allocation has not yet been finalized.~~

above acquisitions will be deductible for tax purposes. The effect of ~~this~~these franchise ~~acquisition~~acquisitions was not material to the Company’s consolidated financial position, results of operations, or operating cash flows in the periods presented.

~~Acquisition~~

4.	Franchise Rights Acquired, Goodwill and Other Intangible Assets

Franchise rights acquired are due to acquisitions of ~~Minority Equity Interest~~the Company’s franchised territories. The franchise rights acquired allocated to the WW.com reporting segment relate to the acquisition of franchise promotion agreements associated with the acquired franchise territories. For the three months ended March 30, 2013, the change in ~~China Joint Venture~~the carrying value of franchise rights acquired is due to the Company’s acquisition of its Alberta and Saskatchewan, Canada franchisees and the effect of exchange rate changes as follows:


	WWI			WW.com
	Segment			Segment			Total
Balance as of December 29, 2012	$	777,826		$	9,181		$	787,007
Franchise rights acquired during the quarter		12,926			17,619			30,545
Effect of exchange rate changes		(1,249	)		(14	)		(1,263	)

Balance as of March 30, 2013	$	789,503		$	26,786		$	816,289

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

~~On February 5, 2008, Weight Watchers Asia Holdings Ltd. (“Weight Watchers Asia”), a direct, wholly-owned subsidiary~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Goodwill is due to the acquisition of the Company by H.J. Heinz Company (“Heinz”) in 1978, the acquisition of WW.com in 2005 and ~~Danone Dairy Asia (“Danone Asia”), an indirect, wholly-owned subsidiary~~the acquisitions of ~~Groupe DANONE S.A., entered into a joint venture agreement to establish a weight management business~~the Company’s franchised territories. For the three months ended March 30, 2013, the change in the ~~People’s Republic~~carrying amount of ~~China. Pursuant~~goodwill is due to the ~~terms~~Company’s acquisition of its Alberta and Saskatchewan, Canada franchisees and the effect of exchange rate changes, as follows:


	WWI			WW.com
	Segment			Segment			Total
Balance as of December 29, 2012	$	28,721		$	30,693		$	59,414
Goodwill acquired during the quarter		1,791			2,384			4,175
Effect of exchange rate changes		(67	)		(53	)		(120	)

Balance as of March 30, 2013	$	30,445		$	33,024		$	63,469

Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of $5,817 and $4,329 for the three months ended March 30, 2013 and March 31, 2012, respectively.

The carrying amount of finite-lived intangible assets as of March 30, 2013 and December 29, 2012 was as follows:


	March 30, 2013				December 29, 2012
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Capitalized software costs	$	87,544	$	56,867	$	86,857	$	54,134
Trademarks		10,421		9,705		10,342		9,615
Website development costs		60,034		40,678		57,042		38,357
Other		7,035		6,705		7,034		6,689

	$	165,034	$	113,955	$	161,275	$	108,795

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


Remainder of fiscal 2013	$	15,771
Fiscal 2014	$	18,015
Fiscal 2015	$	11,773
Fiscal 2016	$	3,608
Fiscal 2017	$	811

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

5.	Long-Term Debt

The components of the ~~joint venture agreement, Weight Watchers Asia and Danone Asia owned 51% and 49%, respectively,~~Company’s long-term debt are as follows:


	March 30, 2013					December 29, 2012
			Effective					Effective
	Balance		Rate			Balance		Rate
Revolver A-1 due June 30, 2014	$	17,210		3.22	%	$	6,374		3.12	%
Revolver A-2 due March 15, 2017		63,790		2.97	%		23,626		2.56	%
Term A-1 Loan due January 26, 2013		0		1.56	%		38,226		1.53	%
Term B Loan due January 26, 2014		129,101		1.81	%		129,445		1.90	%
Term C Loan due June 30, 2015		112,205		2.56	%		113,808		2.72	%
Term D Loan due June 30, 2016		117,915		2.56	%		118,217		2.77	%
Term E Loan due March 15, 2017		1,139,848		2.51	%		1,154,651		2.53	%
Term F Loan due March 15, 2019		819,952		4.00	%		822,017		3.92	%

Total Debt		2,400,021		3.00	%		2,406,364		2.91	%
Less Current Portion		204,197					114,695

Total Long-Term Debt	$	2,195,824				$	2,291,669

The Company’s credit facilities at the end 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.~~2013 consisted of the following term loan facilities and revolving credit facilities: a tranche A-1 loan (“Term A-1 Loan”), a tranche B loan (“Term B Loan”), a tranche C loan (“Term C Loan”), a tranche D loan (“Term D Loan”), a tranche E loan (“Term E Loan”), a tranche F loan (“Term F Loan”), revolving credit facility A-1 (“Revolver A-1” ) and revolving credit facility A-2 (“Revolver A-2”).

OnAfter the end of the Company’s first fiscal quarter of fiscal 2013, on April ~~27, 2011, Weight Watchers Asia entered into a share purchase agreement with Danone Asia,~~2, 2013, the Company refinanced its credit facilities pursuant to a Credit Agreement (the “New Credit Agreement”) among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and an issuing bank, The Bank of Nova Scotia, as revolving agent, swingline lender and an issuing bank, and the other parties thereto. The New Credit Agreement provides for (a) a revolving credit facility (including swing line loans and letters of credit) in an initial aggregate principal amount of $250,000 that will mature on April 2, 2018 (the “Revolving Facility”), (b) an initial term B-1 loan credit facility in an aggregate principal amount of $300,000 that will mature on April 2, 2016 (the “Tranche B-1 Term Facility”) and (c) an initial term B-2 loan credit facility in an aggregate principal amount of $2,100,000 that will mature on April 2, 2020 (the “Tranche B-2 Term Facility”, and together with the Tranche B-1 Term Facility, the “Term Facilities”; the Term Facilities and Revolving Facility collectively, the “WWI Credit Facility”). In connection with this refinancing, the Company used the proceeds from borrowings under the Term Facilities to pay off a total of $2,399,904 of outstanding loans, consisting of $128,759 of Term B Loans, $110,602 of Term C Loans, $117,612 of Term D Loans, $1,125,044 of Term E Loans, $817,887 of Term F Loans, $21,247 of loans under the Revolver A-1 and $78,753 of loans under the Revolver A-2. Following the refinancing of a total of $2,399,904 of loans, at April 2, 2013, the Company had $2,400,000 debt outstanding under the Term Facilities and $248,848 of availability under the Revolving Facility. The proceeds from borrowings under the Revolving Facility (including swing line loans and letters of credit) will be used for working capital and general corporate purposes. Borrowings under the New Credit Agreement bear interest at a rate equal to, at the Company’s option, LIBOR plus an applicable margin or a base rate plus an applicable margin. Borrowings under the Tranche B-1 Term Facility initially bear interest at LIBOR plus an applicable margin of 2.75% or base rate plus an applicable margin of 1.75%. Borrowings under the Tranche B-2 Term Facility initially bear interest at LIBOR plus an applicable margin of 3.00% or base rate plus an applicable margin of 2.00%. Borrowings under the Revolving Facility initially bear interest at LIBOR or base rate plus an applicable margin which ~~Weight Watchers Asia acquired Danone Asia’s 49% minority equity interest in~~will fluctuate depending upon the ~~China Joint Venture~~Company’s total leverage ratio. At the Company’s total leverage ratio as of ~~that date for consideration~~April 2, 2013, borrowings under the Revolving Facility bear interest at LIBOR plus an applicable margin of ~~$1. Effective April 27, 2011,~~2.25% or base rate plus an applicable margin of 1.25%. LIBOR under 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 reclassifiedTranche B-2 Term Facility is subject to ~~retained earnings.~~

4.	~~Goodwill and Intangible Assets~~

For the nine months ended September 29, 2012, the change in goodwill was due to foreign currency fluctuations. The Company’s goodwill by reportable segment at September 29, 2012 was $25,018 related to its

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

~~WWI segment and $26,200 related to its WW.com segment. Franchise rights acquired are due to acquisitions~~a minimum interest rate 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 September 29, 2012 and December 31, 2011 was as follows:~~

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








   $ 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
   $ 4,172
Fiscal 2013
   $ 17,394
Fiscal 2014
   $ 13,470
Fiscal 2015
   $ 7,336
Fiscal 2016
   $ 2,407

5.	~~Long-Term Debt~~

~~The components of the Company’s long-term debt are as follows:~~

   September 29, 2012 December 31, 2011
   Balance    Effective
Rate Balance    Effective
Rate
Term A-1 Loan due January 26, 2013
   $ 57,339       1.51 % $ 148,749       1.30 %
Term B Loan due January 26, 2014
   129,789       1.91 % 238,125       1.65 %
Term C Loan due June 30, 2015
   115,411       2.74 % 426,075       2.55 %
Term D Loan due June 30, 2016
   118,519       2.81 % 238,852       2.56 %
Term E Loan due March 15, 2017
   1,169,453       2.53 % 0       0.00 %
Term F Loan due March 15, 2019
   824,083       3.88 % 0       0.00 %





Total Debt
   2,414,594       2.87 % 1,051,801       2.15 %
Less Current Portion
   133,808       124,933





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

~~WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)~~

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 facilities0.75% and the ~~revolving credit facility and~~base rate under the Tranche B-2 Term Facility is subject to ~~obtain new commitments for the borrowing~~a minimum interest rate 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”)1.75%. 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 priorapplicable margin relating 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~~both of the Term ~~A-1 Loan and $301,777~~Facilities will increase by 25 basis points 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 caseevent 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~~receives a corporate rating of ~~$25,425 during the first quarter~~BB- from S&P (or lower) and a corporate rating of ~~fiscal 2012.~~Ba3 from Moody’s (or lower). On ~~March 27, 2012,~~a quarterly basis, 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~~will 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 September 29, 2012, the Company had $2,414,594 outstanding under the WWI Credit Facility, consisting entirely of term loans and there were no loans outstanding under any of the revolving credit facilities. In addition, at September 29, 2012, the Revolver A-1 had $186 in issued but undrawn letters of credit outstanding thereunder and $70,490 in available unused commitments thereunder and the Revolver A-2 had $691 in issued but undrawn letters of credit outstanding thereunder and $261,280 in available unused commitments thereunder.

At 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 3.01% and 2.40% per annum at 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 September 29, 2012, the Term A-1 Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus 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)

~~WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)~~

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 2.25% per annum; the Term F Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus 3.00% per annum; had any loans under the Revolver A-1 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 been outstanding, they would have borne interest at a rate equal to LIBO Rate (Reserve Adjusted) plus 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~~the Revolving Facility in respect of ~~the Revolver A-1 and the Revolver A-2 with respect to the unused~~unutilized commitments ~~under each such facility at a rate that is dependent on~~thereunder, which commitment fee will fluctuate depending upon the Company’s ~~Net Debt to EBITDA Ratio from time to time in effect. As~~total leverage ratio. At the Company’s total leverage ratio as of ~~September 29, 2012,~~April 2, 2013, the ~~applicable~~ commitment fee ~~rate for the Revolver A-1 was 0.50% per annum and for the Revolver A-2 was~~will be 0.40% per annum. The Company also will pay customary letter of credit fees and fronting fees under the Revolving Facility. In connection, with this refinancing, the Company incurred fees of approximately $45,000 during the second quarter of fiscal 2013. In the second quarter of fiscal 2013, the Company expects to record a charge of $21,685 in early extinguishment of debt primarily reflecting the write-off of a portion of previously capitalized deferred financing costs.

The ~~WWI~~New Credit ~~Facility~~Agreement 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~~Revolving Facility also requires the Company to maintain a specified financial ratios and satisfy certain financial condition tests. At 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 defaultratio, but only if borrowings under the ~~WWI Credit~~Revolving Facility ~~the lenders thereunder may cease making loans and declare amounts outstanding to be immediately due and payable.~~exceed 20.0% of revolving commitments. 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~~Term Facilities do not require the Company to ~~make loan modification offers to all lenders of~~maintain 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.financial ratios.

6.	Treasury Stock

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.

~~WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)~~

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~~then existing credit facilities to finance these repurchases. ~~See Note 5.~~For a discussion of the Company’s amendment and extension of the then existing credit facilities, see “Long-Term Debt” in the Notes to Consolidated Financial Statements of the Company’s Annual Report on Form 10-K for fiscal 2012.

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 ~~nine~~three months ended ~~September 29,~~March 30, 2013 and March 31, 2012, the Company purchased no shares of its common stock in the open market under the repurchase program. ~~During the nine months ended 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 stock repurchase program.

7.	Earnings Per Share

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.

~~The following table sets forth the computation of basic and diluted EPS:~~

   Three Months Ended    Nine Months Ended
   September 29,
2012    October 1,
2011    September 29,
2012    October 1,
2011
Numerator:

Net income attributable to Weight Watchers International, Inc.
   $ 67,364       $ 80,650       $ 199,431       $ 241,206








Denominator:

Weighted average shares of common stock outstanding
   55,635       73,567       61,828       73,265
Effect of dilutive common stock equivalents
   487       696       658       775








Weighted average diluted common shares outstanding
   56,122       74,263       62,486       74,040








EPS attributable to

Weight Watchers International, Inc.:

Basic
   $ 1.21       $ 1.10       $ 3.23       $ 3.29








Diluted
   $ 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 766 and 234 for the three months ended September 29, 2012 and October 1, 2011, respectively, and 462 and 165 for the nine months ended September 29, 2012 and October 1, 2011, respectively.

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following table sets forth the computation of basic and diluted EPS:


	Three Months Ended
	March 30, 2013		March 31, 2012
Numerator:
Net income	$	48,753	$	54,605

Denominator:
Weighted average shares of common stock outstanding		55,801		73,343
Effect of dilutive common stock equivalents		444		821

Weighted average diluted common shares outstanding		56,245		74,164

Earnings per share
Basic	$	0.87	$	0.74

Diluted	$	0.87	$	0.74

The number of anti-dilutive common stock equivalents excluded from the calculation of weighted average shares for diluted EPS was 1,056 and 129 for the three months ended March 30, 2013 and March 31, 2012, respectively.

8.	Stock Plans

On May 6, 2008 and May 12, 2004, ~~and December 16, 1999,~~ respectively, the Company’s shareholders approved the 2008 Stock Incentive Plan (the “2008 Plan”), and 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.

9.	Income Taxes

The effective tax rate for both the three ~~and nine~~ months ended ~~September 29,~~March 30, 2013 and March 31, 2012 was 38.5%. ~~The effective tax rates for~~For both the three ~~and nine~~ months ended ~~October 1, 2011 were 35.1%~~March 30, 2013 and ~~37.1%, respectively. For the three and nine months ended September 29,~~March 31, 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 and the reversal of certain tax reserves due to the expiration of the applicable statutes of limitations. For the three and nine months ended 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 and the US tax benefit associated with losses due to the closing of the Company’s Finland business.jurisdictions.

10.

Legal

~~UK Self-Employment Matter~~

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 been set for January 2013.

~~WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)~~

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 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 third quarter of fiscal 2012 equaled approximately $14,707 in the aggregate based on the exchange rates at the end of the third quarter of fiscal 2012. Although the Company disagrees with the First Tier Tribunal’s adverse ruling and believes it has valid grounds to obtain a reversal on appeal, the Company is currently in discussions with HMRC to determine if this matter can be settled prior to the January 2013 appeal hearing date.

~~Other Litigation Matters~~

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.

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

11.	Derivative Instruments and Hedging

As of ~~September 29,~~March 30, 2013 and March 31, 2012, ~~and October 1, 2011,~~ the Company had in effect interest rate swaps with notional amounts totaling ~~$640,500~~$470,000 and ~~$800,000,~~$755,000, 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 ~~third~~first 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 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 Statements of Net Income within the next 12 months due to hedge ineffectiveness.

As of ~~September 29,~~March 30, 2013 and March 31, 2012, ~~and October 1, 2011,~~ cumulative unrealized losses for qualifying hedges were reported as a component of accumulated other comprehensive income in the amounts of ~~$8,456~~$5,005 ($~~13,863~~8,205 before taxes) and ~~$17,607~~$11,521 ($~~28,864~~18,886 before taxes), respectively. For the three ~~and nine~~ months ended ~~September 29,~~March 30, 2013 and March 31, 2012, ~~and October 1, 2011,~~ there were no fair value adjustments recorded in the ~~Statements~~Statement of Net Income since all hedges were considered qualifying and effective.

~~WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)~~

The Company expects approximately ~~$6,926~~$5,005 ($~~11,355~~8,205 before taxes) of derivative losses included in accumulated other comprehensive income at ~~September 29, 2012,~~March 30, 2013, based on current market rates, will be reclassified into earnings within the next 12 months given that the Company is hedging forecasted transactions for periods not exceeding the next ten months.

12.	Fair Value Measurements

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:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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

Fair Value of Financial Instruments

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 ~~September 29,~~March 30, 2013 and March 31, 2012, ~~and October 1, 2011,~~ the fair value of the Company’s long-term debt was approximately ~~$2,390,017~~$2,403,021 and ~~$1,039,962,~~$1,742,151, respectively.

Derivative Financial Instruments

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.

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

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

      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)
Interest rate swap asset at September 29, 2012
   $ 0       $ 0       $ 0       $ 0
Interest rate swap asset at December 31, 2011
   $ 0       $ 0       $ 0       $ 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


	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)
Interest rate swap asset at March 30, 2013	$	0	$	0	$	0	$	0
Interest rate swap asset at December 29, 2012	$	0	$	0	$	0	$	0
Interest rate swap liability at March 30, 2013	$	10,828	$	0	$	10,828	$	0
Interest rate swap liability at December 29, 2012	$	13,871	$	0	$	13,871	$	0

13.	Accumulated Other Comprehensive Income

Amounts reclassified out of accumulated other comprehensive income are as follows:

Changes in Accumulated Other Comprehensive Income by Component^(a)


	Three Months Ended March 30, 2013
	Loss on Qualifying Hedges			Foreign Currency Translation Adjustments			Total
Beginning Balance at December 29, 2012	$	(6,602	)	$	19,461		$	12,859

Other comprehensive loss before reclassifications, net of tax		(24	)		(33	)		(57	)
Amounts reclassified from accumulated other comprehensive income, net of tax^(b)		1,621			0			1,621

Net current period other comprehensive income (loss)		1,597			(33	)		1,564

Ending Balance at March 30, 2013	$	(5,005	)	$	19,428		$	14,423

^(a)	Amounts in parentheses indicate debits

^(b)	See separate table below for details about these reclassifications

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Reclassifications out of Accumulated Other Comprehensive Income^(a)


Three Months Ended March 30, 2013
Details about Other Comprehensive Income Components	Amounts Reclassified from Accumulated Other Comprehensive			Affected Line Item in the Statement Where Net Income is Presented
Loss on Qualifying Hedges
Interest rate contracts	$	(2,657	)	Interest expense

		(2,657	)	Income before income taxes
		1,036		Provision for income taxes

	$	(1,621	)	Net income

^(a)	Amounts in parentheses indicate debits to profit/loss

14.	Segment Data

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~~

Information about the Company’s reportable segments is ~~eliminated in consolidation.~~as follows:


	Three Months Ended March 30, 2013
	WWI		WW.com		Consolidated
Total revenue	$	344,776	$	142,152	$	486,928


Depreciation and amortization	$	9,584	$	2,685	$	12,269


Operating income	$	40,852	$	62,267	$	103,119

Interest expense						22,550
Other expense, net						1,296
Provision for taxes						30,520

Net income					$	48,753

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

~~Information about the Company’s reportable segments is as follows:~~

   Three Months Ended September 29, 2012
   WWI    WW.com    Consolidated
Total revenue
   $ 305,657       $ 124,953       $ 430,610






Depreciation and amortization
   $ 8,660       $ 2,363       $ 11,023






Operating income
   $ 60,476       $ 71,508       $ 131,984





Interest expense
         23,225
Other income, net
         (756 )
Provision for taxes
         42,151


Net income
         $ 67,364


   Three Months Ended October 1, 2011
   WWI    WW.com    Consolidated
Total revenue
   $ 325,584       $ 102,850       $ 428,434






Depreciation and amortization
   $ 6,323       $ 2,587       $ 8,910






Operating income
   $ 82,378       $ 55,921       $ 138,299





Interest expense
         13,655
Other expense, net
         285
Provision for taxes
         43,709


Net income
         $ 80,650

~~WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)~~


	Nine Months Ended September 29, 2012						Three Months Ended March 31, 2012
	WWI		WW.com		Consolidated		WWI		WW.com		Consolidated
Total revenue	$	1,029,524	$	389,373	$	1,418,897	$	375,342	$	128,193	$	503,535


Depreciation and amortization	$	24,597	$	7,262	$	31,859	$	7,475	$	2,524	$	9,999


Operating income	$	199,461	$	188,805	$	388,266	$	57,312	$	45,462	$	102,774

Interest expense						60,149						13,167
Other expense, net						2,531
Other income, net												(509	)
Early extinguishment of debt						1,328						1,328
Provision for taxes						124,827						34,183

Net income					$	199,431					$	54,605


	Nine Months Ended October 1, 2011
	WWI		WW.com		Consolidated
Total revenue	$	1,114,569	$	303,309	$	1,417,878


Depreciation and amortization	$	19,076	$	7,472	$	26,548


Operating income	$	280,234	$	149,125	$	429,359

Interest expense						46,840
Other expense, net						40
Provision for taxes						141,796

Net income					$	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.~~2012.

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

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:

competition from other weight management industry participants or the development of more effective or more favorably perceived weight management methods;

our ability to continue to develop innovative new services and products and enhance our existing services and products, or the failure of our services and products to continue to appeal to the market;

the effectiveness of our marketing and advertising programs;

the impact on the Weight Watchers brand of actions taken by our franchisees, licensees and suppliers;

risks and uncertainties associated with our international operations, including economic, political and social risks and foreign currency risks;

our ability to successfully make acquisitions or enter into joint ventures, including our ability to successfully integrate, operate or realize the projected benefits of such businesses;

uncertainties related to a downturn in general economic conditions or consumer confidence;

the seasonal nature of our business;

the impact of events that discourage or impede people from gathering with ~~others;~~others or accessing resources;

our ability to enforce our intellectual property rights both domestically and internationally, as well as the impact of our involvement in any claims related to intellectual property rights;

uncertainties regarding the satisfactory operation of our information technology or systems;

the impact of security breaches or privacy concerns;

the impact of disputes with our franchise operators;

the impact of existing and future laws and regulations;

the impact of our debt service obligations and restrictive debt covenants;

the possibility that the interests of our majority owner will conflict with other holders of our common stock; and

other risks and uncertainties, including those detailed from time to time in our periodic reports filed with the Securities and Exchange Commission.

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^st31st and consists of either 52- or 53-week periods. In this Quarterly Report on Form 10-Q:

~~“fiscal 2008” refers to our fiscal year ended January 3, 2009;~~

~~“fiscal 2009” refers to our fiscal year ended January 2, 2010;~~

~~“fiscal 2010” refers to our fiscal year ended January 1, 2011;~~

~~“fiscal 2011” refers to our fiscal year ended December 31, 2011;~~

“fiscal 2012” refers to our fiscal year ended December 29, 2012;

“fiscal 2013” refers to our fiscal year ended December 28, 2013;

“fiscal 2014” refers to our fiscal year ended January 3, 2015;

“fiscal 2015” refers to our fiscal year ended January 2, 2016; ~~and~~

“fiscal 2016” refers to our fiscal year ended December 31, ~~2016.~~2016; and

“fiscal 2017” refers to our fiscal year ended December 30, 2017.

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

You should read the following discussion in conjunction with our Annual Report on Form 10-K for fiscal ~~2011~~2012 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”).

USE OF CONSTANT CURRENCY

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.

CRITICAL ACCOUNTING POLICIES

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.~~2012. Our critical accounting policies have not changed since the end of fiscal ~~2011.~~2012.

RESULTS OF OPERATIONS

OVERVIEW

Fiscal 2011 was a year of revenue and volume growth in all fiscal quarters as compared to the prior year periods. We experienced accelerated period-over-period volume growth in our North American and UK meetings and Weight Watchers.com businesses throughout the year. The momentum of our new program launches, PointsPlus in North America and ProPoints in our other English-speaking markets, and strong marketing and public relations efforts drove this accelerated growth and historically high volumesTotal paid weeks in fiscal ~~2011.~~

~~Similar~~2012 continued to ~~the first and second quarters of~~grow in each fiscal ~~2012, the third~~ quarter of fiscal 2012 had, though to a lesser extent than the first and second quarters, the challenge of being compared against the historically high levels of recruitment growth and related results of fiscal 2011. Net revenues were $430.6 million in the third quarter of fiscal 2012, as compared to $428.4 million in the third quarter of fiscal 2011. Growth in Internet revenues in the third quarter of fiscal 2012 versus the prior year period, ~~was almost fully offset by revenue declines~~but at a slower rate as we moved through the year due to a challenging recruitment environment, particularly for our global meetings business.

The fiscal 2013 winter diet season proved to be challenging given the tough economic environment and intense competition. While paid weeks growth in the ~~meetings business. Despite gross margin for the third~~first 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%2013 versus the prior year period ~~to $67.4 million.~~

~~The first nine months of fiscal 2012 versus~~remained positive at 1.4%, recruitments in both the ~~prior year period had similar performance trends as each of the individual fiscal quarters. Net revenues~~global meetings and US Weight Watchers Online business were ~~$1,418.9 million~~weak in the ~~first nine months of fiscal 2012, as compared~~quarter. In response, we have made several adjustments to ~~$1,417.9 million~~improve our position 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 first nine months of fiscal 2012 grew to 59.0% from 57.9% in the first nine months of fiscal 2011. Both marketing expenses and selling, general and administrative expenses increased asmarket with consumers, including a ~~percentage of revenue in the first nine months of fiscal 2012 versus the prior year period due to our investments in growth initiatives. As~~new spring advertising campaign. Further, we implemented a result, operating income margin for the first nine months of fiscal 2012 declined 2.9% to 27.4% from 30.3% in the first nine months of fiscal 2011. Consequently, and as a result of higher interest expense, a write-off of an investment and a higher tax rate, net income attributable to the Company in the first nine months of fiscal 2012 declined 17.3% versus the prior year period to $199.4 million.comprehensive cost savings program.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED ~~SEPTEMBER 29, 2012~~MARCH 30, 2013 COMPARED TO THE THREE MONTHS ENDED ~~OCTOBER 1, 2011~~MARCH 31, 2012

The table below sets forth selected financial information for the ~~third~~first quarter of fiscal 2013 from our consolidated statements of net income for the three months ended March 30, 2013 versus selected financial information for the first quarter of fiscal 2012 from our consolidated statements of net income for the three months ended ~~September 29, 2012 versus selected financial information for the third quarter of fiscal 2011 from our consolidated statements of net income for the three months ended October 1, 2011:~~March 31, 2012:

Summary of Selected Financial Data


	(In millions, except per share amounts)										(In millions, except per share amounts)
	For the Three Months Ended										For the Three Months Ended
	September 29, 2012			October 1, 2011			Increase/ (Decrease)		% Change		March 30, 2013			March 31, 2012			Increase/ (Decrease)		% Change
Revenues, net	$	430.6		$	428.4		$	2.2		0.5%	$	486.9		$	503.5		$	(16.6)		(3.3%)

Cost of revenues		174.8			177.3			(2.5)		(1.4%)		206.8			215.2			(8.4)		(3.9%)


Gross profit		255.8			251.2			4.6		1.9%		280.2			288.4			(8.2)		(2.8%)
Gross Margin %		59.4	%		58.6	%						57.5	%		57.3	%

Marketing expenses		65.9			61.5			4.4		7.1%		118.9			130.3			(11.4)		(8.8%)

Selling, general & administrative expenses		58.0			51.4			6.6		12.8%		58.1			55.3			2.8		5.1%

Operating income		132.0			138.3			(6.3)		(4.6%)		103.1			102.8			0.3		0.3%
Operating Income Margin %		30.7	%		32.3	%						21.2	%		20.4	%

Interest expense		23.2			13.7			9.6		70.1%		22.6			13.2			9.4		71.3%
Other (income) expense, net		(0.8)			0.3			(1.0)		-100.0%
Other expense/(income), net												1.3			(0.5	)		1.8		(100.0%)
Early extinguishment of debt												—			1.3			(1.3)		(100.0%)

Income before income taxes		109.5			124.4			(14.8)		(11.9%)		79.3			88.8			(9.5)		(10.7%)

Provision for income taxes		42.2			43.7			(1.6)		(3.6%)		30.5			34.2			(3.7)		(10.7%)

Net income attributable to the Company	$	67.4		$	80.7		$	(13.3)		(16.5%)
Net income											$	48.8		$	54.6		$	(5.9)		(10.7%)


Weighted average diluted shares outstanding		56.1			74.3			(18.1)		(24.4%)		56.2			74.2			(17.9)		(24.2%)


Diluted EPS	$	1.20		$	1.09		$	0.11		10.5%	$	0.87		$	0.74		$	0.13		17.7%

Note: Totals may not sum due to rounding.

Consolidated Results

Revenues

Net revenues were ~~$430.6~~$486.9 million in the ~~third~~first quarter of fiscal ~~2012,~~2013, as compared to ~~$428.4~~$503.5 million in the ~~third~~first quarter of fiscal ~~2011.~~2012. Excluding the impact of foreign currency, which negatively impacted our revenues for the ~~third~~first quarter of fiscal ~~2012~~2013 by ~~$9.2~~$0.6 million, net revenues in the ~~third~~first quarter of fiscal ~~2012 grew 2.7%~~2013 declined 3.2% versus the prior year period. The ~~third~~revenue decline in the first quarter of fiscal 2013 was driven by declines in the meetings business globally, most notably in the NACO and the UK meetings businesses. The decline in NACO and the UK meetings businesses was driven in large part by a lower incoming active base at the start of fiscal 2013 as compared to fiscal 2012, as well as, recruitment softness in the first quarter of fiscal 2013 caused by difficult macroeconomic factors in these markets, particularly consumer confidence which has been negatively impacted by the combination of continued uncertainty about the economy and the impact of local changes such as the retirement of the US payroll tax holiday. Our Continental European meetings business, which cycled against a new program innovation and benefited from new marketing strategies in the prior year first quarter, also experienced a decline in revenue on a constant currency basis. These declines in the meetings businesses were partially offset by growth in WeightWatchers.com which benefited from a higher active Online subscriber base at the start of ~~the quarter~~fiscal 2013 as compared to ~~the start of the 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 more than offset by revenue declines in the NACO and UK meetings businesses as they cycled against the momentum of their new program innovations and stronger marketing in the third quarter of fiscal 2011. In addition, meeting revenues in the 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, though to a lesser extent than the first half of fiscal 2012, as well as by macro-economic factors, particularly consumer confidence, in NACO and the United Kingdom.2012.

The combination of the above factors also led to ~~a 4.2%~~an 8.1% decline in global meeting paid weeks in ~~the third~~first quarter of fiscal ~~2012~~2013 versus the prior year period. ~~In contrast, with~~With the ~~benefits~~benefit of starting ~~the third quarter~~fiscal 2013 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 ~~23.2%~~10.3% in Online paid weeks ~~as well as a 19.5% increase in end of period active Online subscribers, in the 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 8.8%~~a 1.4% increase in global paid weeks in the ~~third~~first quarter of fiscal ~~2012~~

2013 versus the prior year period. Global attendance in the ~~third~~first quarter of fiscal ~~2012~~2013 declined ~~10.2%~~17.4% in comparison to the ~~third~~first quarter of fiscal ~~2011.~~2012. We have been seeing a widening in the gap between attendance and paid weeks, which is a natural function of the increase in the average tenure of our Monthly Pass active base. Our end of period active Online subscriber base increased 6.2% in the first quarter of fiscal 2013 versus the prior year period and was negatively impacted by recruitment weakness in the first quarter of fiscal 2013 in the United States.

Gross Profit and Operating Income

Gross profit for the ~~third~~first quarter of fiscal ~~2012~~2013 of ~~$255.8~~$280.2 million ~~increased $4.6~~decreased $8.2 million, or ~~1.9%~~2.8%, from ~~$251.2~~$288.4 million in the ~~third~~first quarter of fiscal ~~2011.~~2012. Excluding the impact of foreign currency which negatively impacted gross profit for the ~~third~~first quarter of fiscal ~~2012~~2013 by ~~$5.4~~$0.4 million, gross profit in the ~~third~~first quarter of fiscal ~~2012 increased~~2013 decreased by ~~$10.0~~$7.9 million, or ~~4.0%~~2.7%, versus the prior year period. Operating income for the ~~third~~first quarter of fiscal ~~2012~~2013 was ~~$132.0~~$103.1 million, ~~a decrease~~an increase of ~~$6.3~~$0.3 million, or ~~4.6%~~0.3%, from ~~$138.3~~$102.8 million in the ~~third~~first quarter of fiscal ~~2011.~~2012. Excluding the impact of foreign currency which negatively impacted operating income for the ~~third~~first quarter of fiscal ~~2012~~2013 by ~~$3.2~~$0.7 million, operating income in the ~~third~~first quarter of fiscal ~~2012 decreased~~2013 increased by ~~$3.1~~$1.1 million, or ~~2.2%~~1.0%, versus the prior year period. This ~~decline~~increase in operating income was primarily the result of ~~an increase~~more efficient spending in ~~selling, general and administrative expenses and~~ marketing ~~investments~~ in the ~~third~~first quarter of fiscal ~~2012~~2013 versus the prior year ~~period.~~period, driven by a combination of the decision made last year to not invest in a Weight Watchers Online US men’s specific marketing campaign for fiscal 2013 and achieving lower and more efficient digital marketing spend in the United States. Our gross margin in the ~~third~~first quarter of fiscal 2013 increased to 57.5% from 57.3% in the first quarter of fiscal 2012, ~~increased to 59.4% from 58.6% in the third quarter of fiscal 2011, but~~and operating income margin in the ~~third~~first quarter of fiscal ~~2012 declined~~2013 increased to ~~30.7%~~21.2% from ~~32.3%~~20.4% in the ~~third~~first quarter of fiscal ~~2011.~~2012. See “—Components of Expenses and Margins” for additional details.

Net Income and Earnings Per Share

Net income ~~attributable to the Company~~ in the ~~third~~first quarter of fiscal 2013 declined 10.7% from $54.6 million in the first quarter of fiscal 2012 ~~declined 16.5% from $80.7 million in~~to $48.8 million. Despite the ~~third quarter of fiscal 2011 to $67.4 million. In addition to the decline~~increase in operating income, 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 tax benefit associated with the closure of our Finland business in the third quarter of fiscal 2011,~~ further reduced net income in the ~~third~~first quarter of fiscal ~~2012.~~2013.

Earnings per fully diluted share in the ~~third~~first quarter of fiscal ~~2012~~2013 were ~~$1.20,~~$0.87, an increase of ~~$0.11~~$0.13 from ~~$1.09~~$0.74 in the ~~third~~first quarter of fiscal ~~2011.~~2012. Earnings per fully diluted share in the ~~third~~first quarter of fiscal ~~2012~~2013 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 for the first quarter of fiscal 2013 decreased to ~~56.1~~56.2 million ~~in the quarter~~ from ~~74.3~~74.2 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.

Components of Revenue and Volumes

We derive our revenues principally from meeting fees, Internet revenues, 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.

Meeting Fees

Global meeting fees for the ~~third~~first quarter of fiscal ~~2012~~2013 were ~~$223.2~~$236.0 million, a decrease of ~~$10.2~~$16.5 million, or ~~4.4%~~6.5%, from ~~$233.4~~$252.5 million in the prior year period. Excluding the impact of foreign currency, which decreased our global meeting fees for the ~~third~~first quarter of fiscal ~~2012~~2013 by ~~$4.6~~$0.4 million, global meeting fees in the ~~third~~first quarter of fiscal ~~2012~~2013 decreased by ~~2.4%~~6.4% versus the prior year period. The decline in meeting fees was driven by ~~a 4.2%~~an 8.1% decline in global meeting paid weeks in the ~~third~~first quarter of fiscal ~~2012~~2013 to ~~23.9~~24.3 million from ~~24.9~~26.5 million in the prior year period. The decline in meeting paid weeks was driven by ~~the~~a lower meeting membership base ~~we had~~ at the beginning of the ~~third~~first quarter of fiscal ~~2012~~2013 versus the beginning of the ~~prior year period,~~first quarter of fiscal 2012 as well as by the lower enrollments in the first quarter ~~versus~~of fiscal 2013 as compared to the prior year period. Global attendance decreased ~~10.2%~~17.4% to ~~11.3~~13.0 million in the ~~third~~first quarter of fiscal ~~2012~~2013 from ~~12.6~~15.8 million in the ~~third~~first quarter of fiscal ~~2011.~~2012.

In NACO, meeting fees in the ~~third~~first quarter of fiscal ~~2012~~2013 were ~~$157.8~~$166.0 million, a decrease of ~~$3.5~~$9.2 million, or ~~2.2%~~5.2%, from ~~$161.2~~$175.1 million in the ~~third~~first quarter of fiscal ~~2011.~~2012. The decline in meeting fees was driven primarily by a ~~3.6%~~6.5% decline in NACO meeting paid weeks from ~~16.6~~17.3 million in the ~~third~~first quarter of fiscal ~~2011~~2012 to ~~16.0~~16.2 million in the ~~third~~first quarter of fiscal ~~2012.~~2013. The decline in meeting paid weeks ~~was driven by~~primarily resulted from the lower meeting membership base at the beginning of the ~~third~~first quarter of fiscal ~~2012~~2013 versus the beginning of the ~~prior year period,~~first quarter of fiscal 2012 as well as by lower enrollments in the first quarter of fiscal 2013 versus the prior year period. ~~In addition to the negative impact of the macro-economic climate,~~Lower enrollments in the first quarter of fiscal 2013 were ~~negatively impacted primarily~~driven by ~~less promotional activity,~~a difficult macroeconomic environment in the United States. Although we introduced our new Weight Watchers 360° program in December 2012, this new program was not as effective in driving trial as compared to thePointsPlus innovation. In the first quarter of fiscal 2013, NACO attendance decreased 15.9% to 8.2 million from 9.8 million in the first quarter of fiscal 2012. The Company completed three franchise acquisitions in NACO in the second half of fiscal 2012 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~~a fourth franchise acquisition 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~~March 2013. These franchise acquisitions benefitted NACO meeting fees ~~per paid week on a constant currency basis~~ in the ~~third~~first quarter of fiscal ~~2012 versus the prior year period, primarily the result of a December 2011 price increase for the U.S. Monthly Pass, which was partially offset~~2013 by a shift to the Monthly Pass model in NACO’s corporate business. NACO revenues for the third quarter of fiscal 2012 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 third quarter of fiscal 2012, NACO attendance decreased 9.4% to 7.2 million from 7.9 million in the third quarter of fiscal 2011.approximately 1.5%.

International meeting fees in the ~~third~~first quarter of fiscal ~~2012~~2013 were ~~$65.4~~$70.0 million, a decrease of ~~$6.7~~$7.4 million, or ~~9.3%~~9.5%, from ~~$72.2~~$77.4 million in the prior year period. Excluding the impact of foreign currency, which decreased international meeting fees for the ~~third~~first quarter of fiscal ~~2012~~2013 by ~~$4.5~~$0.3 million, international meeting fees declined by ~~3.1%~~9.1% in the ~~third~~first quarter of fiscal ~~2012~~2013 versus the prior year period. ~~Third~~In the first quarter of fiscal ~~2012~~2013, the decline in meeting fees ~~were~~was driven ~~lower~~ by ~~a 5.4%~~an 11.3% decline in international meeting paid weeks in the ~~third~~ quarter ~~of fiscal 2012~~ versus the prior year period. Meeting paid weeks performance in the ~~third~~first quarter of fiscal ~~2012~~2013 was driven by declines in enrollments in most of our international markets in the quarter versus the prior year period. International attendance decreased by 19.9% in the first quarter of fiscal 2013 versus the prior year period.

In the first quarter of fiscal 2013, UK meeting fees decreased by 17.6% to $23.6 million from $28.6 million in the first quarter of fiscal 2012. Excluding the impact of foreign currency, which decreased UK meeting fees for the first quarter of fiscal 2013 by $0.3 million, UK meeting fees declined by 16.4% in the first quarter of fiscal 2013 versus the prior year period. First quarter fiscal 2013 meeting fees were driven lower primarily by a decline of 17.8% in UK meeting paid weeks versus the prior year period. Meeting paid weeks performance in the first quarter of fiscal 2013 was driven by the lower meeting membership base at the beginning of the first quarter of fiscal 2013 versus the beginning of the first quarter of fiscal 2012 coupled with lower enrollments in the period as compared to enrollment levels in the prior year ~~period, as well as lower enrollments, particularly~~period. In the first quarter of fiscal 2013, weak macroeconomic trends in the United Kingdom, as well as local competition, contributed to the decline in ~~the quarter versus the prior year period. International~~enrollments. UK attendance decreased by ~~11.4%~~25.8% in the ~~third~~first quarter of fiscal ~~2012~~2013 versus the prior year period.

InMeeting fees in Continental Europe were $36.7 million in the ~~third~~first quarter of fiscal ~~2012, UK meeting fees decreased by 14.0% to $25.3 million from $29.4 million in~~2013, flat versus the ~~third~~first quarter of fiscal ~~2011.~~2012. 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. Enrollments in the quarter were negatively impacted primarily by less effective marketing and the macro-economic climate versus the prior year period. UK attendance decreased by 17.5% in the third quarter of fiscal 2012 versus the prior year period.

The Continental European meetings business experienced a decrease in meeting fees of 0.8% to $30.6 million in the third quarter of fiscal 2012 from $30.9 million in the third quarter of fiscal 2011. Excluding the impact of foreign currency, which decreasedincreased Continental European meeting fees ~~for~~in the ~~third~~first quarter of fiscal ~~2012~~2013 by ~~$3.8~~$0.2 million, Continental European meeting fees ~~increased~~decreased by ~~11.6%~~0.4% in the ~~third~~first quarter of fiscal ~~2012~~2013 as compared to the prior year period. The ~~increase~~decrease in meeting fees on a constant currency basis was driven by ~~an increase~~a decrease of ~~12.1%~~1.0% in Continental European meeting paid weeks in the ~~third~~first quarter of fiscal ~~2012~~2013 versus the prior year period. The ~~increase~~decrease in meeting paid weeks was driven ~~primarily~~by lower enrollments in the first quarter of fiscal 2013 as compared to the prior year period. These lower enrollments were the result of cycling against very effective new marketing strategies in this region 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 the ~~third~~first quarter of fiscal ~~2012~~2013 versus the beginning of the ~~prior year period. Despite the difficult economic climate across Continental Europe, we experienced a slight increase in enrollments in the~~first quarter ~~versus the prior year period, which was the result~~ of ~~effective new marketing strategies in France and Germany.~~fiscal 2012. In Continental Europe, attendance ~~increased~~decreased by ~~4.9%~~10.9% in the ~~third~~first quarter of fiscal ~~2012~~2013 versus the prior year period.

In-Meeting Product Sales

Global in-meeting product sales for the ~~third~~first quarter of fiscal ~~2012~~2013 were ~~$54.6~~$74.2 million, a decrease of ~~$6.6~~$12.9 million, or ~~10.8%~~14.8%, from ~~$61.3~~$87.1 million in the ~~third~~first quarter of fiscal ~~2011.~~2012. Excluding the impact of foreign currency, which decreased in-meeting product sales for the ~~third~~first quarter of fiscal ~~2012~~2013 by ~~$1.4~~$0.1 million, global in-meeting product sales in the ~~third~~first quarter of fiscal ~~2012~~2013 declined ~~8.4%~~14.7% versus the prior

year period. This decrease resulted primarily from a ~~10.2%~~17.4% decline in global meeting attendance in the first quarter of fiscal 2013 versus the prior year period. Slightly offsetting this decline was an increase in product sales per attendee in the first quarter of fiscal 2013 versus the prior year period. On a per attendee basis, ~~third~~in the first quarter of fiscal ~~2012~~2013, global in-meeting product sales ~~decreased 0.7%~~increased 3.2%, ~~but increased 1.9%~~or 3.3% on a constant currency basis, versus the prior year period. This increase in in-meeting product sales per attendee in the ~~third~~first quarter of fiscal ~~2012~~2013 was ~~primarily~~driven by strong per attendee sales of consumables across Continental Europe and in the ~~result of~~United Kingdom and the new ActiveLink product ~~category expansion~~ in ~~North America and Continental Europe.~~NACO.

In NACO, ~~third~~first quarter fiscal ~~2012~~2013 in-meeting product sales of ~~$32.0~~$42.7 million decreased by ~~$2.3~~$7.5 million, or ~~6.6%~~15.0%, versus the prior year period. This decrease ~~was driven by~~resulted primarily from a ~~9.4%~~15.9% attendance decline ~~and was partially offset by a 3.1% increase in in-meeting product sales per attendee,~~ in the ~~third~~first quarter of fiscal ~~2012~~2013 as compared to the prior year period. In-meeting product sales per attendee increased by 1.1% in the first quarter of fiscal 2013 versus the prior year period as strong first quarter of fiscal 2013 sales of the new ActiveLink product more than offset the decline in sales of consumables and electronics.

International in-meeting product sales were ~~$22.7~~$31.5 million in the ~~third~~first quarter of fiscal ~~2012,~~2013, a decrease of ~~16.1%~~14.6%, or ~~10.9%~~14.5% on a constant currency basis, versus the prior year period. This decrease was driven primarily by an attendance decline of ~~11.4%~~19.9% in the ~~third~~first quarter of fiscal ~~2012~~2013 as compared to the ~~third~~first quarter of fiscal ~~2011,~~2012, which was largely driven by the United Kingdom. ~~In addition, in-meeting~~In-meeting product sales per attendee in the ~~third~~first quarter of fiscal ~~2012 declined by 5.3%, but~~2013 increased by ~~0.6%~~6.7%, or 6.8% on a constant currency basis, as compared to the prior year period. This increase was the result of strong sales of consumables in the United Kingdom, Germany, France and Belgium driven in part by new product introductions and successful promotions.

Internet Revenues

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 ~~$22.3~~$13.8 million, or ~~21.9%~~10.9%, to ~~$124.2~~$140.8 million in the ~~third~~first quarter of fiscal ~~2012~~2013 from ~~$101.9~~$126.9 million in the ~~third~~first quarter of fiscal ~~2011.~~2012. Excluding the impact of foreign currency, which decreased Internet revenues for the ~~third~~first quarter of fiscal ~~2012~~2013 by ~~$2.3~~$0.1 million, Internet revenues grew by ~~24.2%~~10.9% in the ~~third~~first quarter of fiscal ~~2012~~2013 versus the prior year period. The ~~combination of a~~ higher active Online subscriber base at the start of the ~~third~~first quarter of fiscal ~~2012,~~2013, up ~~26.4%~~18.0%, versus the beginning of the ~~third~~first quarter of fiscal ~~2011~~2012, and effective marketing campaigns in Continental Europe ~~and Canada~~ contributed to Online paid weeks growth of ~~23.2%~~10.3% in the ~~third~~first quarter of fiscal ~~2012~~2013 versus the prior year period. ~~The~~However, the growth ~~rate in~~trend of Online paid weeks slowed in the ~~third~~first quarter of fiscal ~~2012 versus the prior year period was less than the comparable growth rate~~2013 driven by weak sign-up performance in the ~~first~~United States as the difficult macroeconomic environment and ~~second quarters~~the heightened competitive backdrop with the popularity of ~~fiscal 2012. This declining trend is the result of lower sign-ups in our US~~free fitness 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~~weight loss applications reduced consumer trial for Weight Watchers Online. End of period active Online subscribers increased by ~~19.5%~~6.2% to ~~2.1~~2.5 million at the end of the ~~third~~first quarter of fiscal ~~2012~~2013 as compared to ~~1.7~~2.4 million at the end of the ~~third~~first quarter of fiscal ~~2011.~~2012.

Other Revenues

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 ~~$28.5~~$36.0 million for the ~~third~~first quarter of fiscal ~~2012,~~2013, a decrease of ~~$3.4~~$1.0 million, or ~~10.5%~~2.7%, from ~~$31.9~~$37.0 million for the ~~third~~first quarter of fiscal ~~2011.~~2012. Excluding the impact of foreign currency, which decreased other revenues for the ~~third~~first quarter of fiscal ~~2012~~2013 by ~~$0.8~~$0.1 million, other revenues were ~~8.1%~~2.5% lower in the ~~third~~first quarter of fiscal ~~2012~~2013 compared to the prior year period. Franchise commissions and sales of products to our franchisees declined in the aggregate by ~~16.2%, or 15.1%~~27.3% on both a reported basis and on a constant currency basis in the ~~third~~first quarter of fiscal ~~2012~~2013 versus the prior year period. Our by mail product sales and revenues from our publications also declined in the aggregate by ~~18.4%~~6.1%, or ~~15.2%~~6.0% on a constant currency basis, in the ~~third~~first quarter of fiscal ~~2012~~2013 versus the prior year 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 third quarter of fiscal 2012 decreased~~increased by ~~2.3%~~11.9%, ~~but increased slightly by 0.2%~~or 12.3% on a constant currency basis, in the first quarter of fiscal 2013 versus the prior year ~~period.~~period, partially offsetting the declines described above.

Components of Expenses and Margins

Cost of Revenues and Gross Margin

Total cost of revenues in the ~~third~~first quarter of fiscal ~~2012~~2013 was ~~$174.8~~$206.8 million, a ~~decrease~~decline of ~~$2.5~~$8.4 million, or ~~1.4%~~3.9%, from ~~$177.3~~$215.2 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~~in the ~~third~~first quarter of fiscal ~~2012~~2013 of ~~$255.8~~$280.2 million ~~increased $4.6~~decreased $8.2 million, or ~~1.9%~~2.8%, from ~~$251.2~~$288.4 million in the ~~third~~first quarter of fiscal ~~2011.~~2012. Gross margin in the ~~third~~first quarter of fiscal ~~2012~~2013 was ~~59.4%~~57.5%, as compared to ~~58.6%~~57.3% in the ~~third~~first quarter of fiscal ~~2011.~~2012. Gross margin expansion was ~~primarily~~driven by the ~~result~~shift of ~~the continued shift in~~ revenue towards the higher margin WeightWatchers.com business. This margin expansion was partially offset by a decline in gross margin in both the meetings business ~~gross margin. This~~and the WeightWatchers.com business. The decline in the meetings business gross margin was ~~primarily~~ driven by athe lower average number of members per meeting, slightly offset by lower costs and price increases taken in some of our markets. The decline in the WeightWatchers.com business gross margin was driven primarily by higher costs associated with our ~~initiative to modernize~~mobile 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.~~website releases.

Marketing

Marketing expenses for the ~~third~~first quarter of fiscal ~~2012~~2013 were ~~$65.9~~$118.9 million, ~~an increase~~a decrease of ~~$4.4~~$11.4 million, or ~~7.1%~~8.8%, versus the ~~third~~first quarter of fiscal ~~2011.~~2012. Excluding the impact of foreign currency, which ~~decreased~~increased marketing expenses for the ~~third~~first quarter of fiscal ~~2012~~2013 by ~~$1.1~~$0.4 million, marketing expenses were ~~8.9% higher~~9.1% lower in the ~~third~~first quarter of fiscal ~~2012~~2013 compared to the prior year period. InThe decline was driven by a decision not to have a focused Weight Watchers Online US marketing campaign for men for fiscal 2013 and achieving lower and more efficient digital marketing spend in the ~~third quarter~~United States. Offsetting this decline was the increased marketing spend related to the airing of ~~fiscal 2012, marketing expenses were higher primarily due to investments~~a new spring celebrity TV campaign in ~~two initiatives: 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. In addition, in the third quarter of fiscal 2012, we increased our investment in other advertising for the Online~~US business in the United States and increased our celebrity TV advertising spend in Germany for the meetings business. The impact of higher volumes on online advertising costs also contributed to the increase in marketing expenses.featuring Ana Gasteyer. Marketing expenses as a percentage of revenue were ~~15.3%~~24.4% in the ~~third~~first quarter of fiscal ~~2012~~2013 as compared to ~~14.4%~~25.9% in the prior year period.

Selling, General and Administrative

Selling, general and administrative expenses were ~~$58.0~~$58.1 million for the ~~third~~first quarter of fiscal 2013 versus $55.3 million for the first quarter of fiscal 2012, ~~versus $51.4 million for the third quarter of fiscal 2011,~~ an increase of ~~$6.6~~$2.8 million, or ~~12.8%~~5.1%. Excluding the impact of foreign currency, which decreased selling, general and administrative expenses for the ~~third~~first quarter of fiscal ~~2012~~2013 by ~~$1.1~~$0.1 million, ~~third~~first quarter of fiscal ~~2012~~2013 selling, general and administrative expenses increased by ~~14.9%~~5.3% versus the ~~third~~first quarter of fiscal ~~2011.~~2012. The increase in expenses was primarily related to investments in ~~growth initiatives, including NACO’s corporate business,~~ technology for the development of our mobile, field systems and customer relationship management platforms and additions to staff in support of 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 globally related to business performance partially offset this increase.platforms. Selling, general and administrative expenses as a percentage of revenue for the ~~third~~first quarter of fiscal ~~2012~~2013 increased to ~~13.5%~~11.9% from ~~12.0%~~11.0% for the ~~third~~first quarter of fiscal ~~2011.~~2012.

Operating Income Margin

Our operating income margin in the ~~third~~first quarter of fiscal ~~2012 decreased~~2013 increased to ~~30.7%, a decrease of 1.6%~~21.2% from ~~32.3%~~20.4% in the ~~third~~first quarter of fiscal ~~2011. The decline~~2012. This increase in operating income margin was primarily driven by ana decision not to have a focused Weight Watchers Online US marketing campaign for men for fiscal 2013 and achieving lower and more efficient digital marketing spend in the United States in the first quarter of fiscal 2013 versus the first quarter of fiscal 2012. In the first quarter of fiscal 2013, marketing expenses decreased as a percentage of revenue, but this decrease was slightly offset by the increase in selling, general and administrative expenses and in marketing costs related to first time Online TV marketing campaigns in three of our international markets, as well as marketing the Weight Watchers Online product to men in the United States. In the third quarter of fiscal 2012, both selling, general and administrative expenses and marketing expenses increased as a percentage of revenue as compared to the prior year period.

Interest Expense ~~and Other~~

Interest expense was ~~$23.2~~$22.6 million for the ~~third~~first quarter of fiscal ~~2012,~~2013, an increase of ~~$9.6~~$9.4 million, or ~~70.1%~~71.3%, from ~~$13.7~~$13.2 million in the ~~third~~first quarter of fiscal ~~2011.~~2012. The increase was primarily driven by ~~higher interest rates on our debt and~~ an increase in our average debt ~~outstanding.~~outstanding and higher interest rates on our debt. The effective interest rate on our debt increased by ~~0.80%~~0.44% to ~~2.92%~~3.00% in the ~~third~~first quarter of fiscal ~~2012~~2013 from ~~2.12%~~2.56% in ~~the third~~first quarter of fiscal ~~2011.~~2012. Our average debt outstanding increased by ~~$1,331.8~~$1,321.0 million to ~~$2,456.7~~$2,393.3 million in the ~~third~~first quarter of fiscal ~~2012~~2013 from ~~$1,124.9~~$1,072.3 million in the ~~third~~first quarter of fiscal ~~2011.~~2012. 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 ~~3.43%~~3.44% in the ~~third~~first quarter of fiscal ~~2012,~~2013, as compared to ~~4.43%~~4.37% in the ~~third~~first quarter of fiscal ~~2011.~~2012.

Other Income and Expense

The Company incurred ~~$0.8~~$1.3 million of other expense in the first quarter of fiscal 2013 as compared to $0.5 million of other income in the ~~third quarter of fiscal 2012 as compared to $0.3 million of other expense in the~~ prior year ~~period, primarily reflecting~~period; both years include the impact of foreign currency on intercompany transactions.

~~Tax~~Early Extinguishment of Debt

Our effective tax rate was 38.5% for the third quarter of fiscal 2012 as compared to 35.1% for the third quarter of fiscal 2011. The difference in period-over-period effective tax rates is primarily the result of the tax benefit associated with the closure of our Finland business in the third quarter of fiscal 2011.

~~RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 29, 2012 COMPARED TO THE NINE MONTHS ENDED OCTOBER 1, 2011~~

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

~~Summary of Selected Financial Data~~

   (In millions, except per share amounts)
   For the Nine Months Ended
   September 29,
2012 October 1,
2011 Increase/
(Decrease)    % Change
Revenues, net
   $ 1,418.9    $ 1,417.9    $ 1.0       0.1%
Cost of revenues
   581.2    596.4    (15.2)       (2.6%)




Gross profit
   837.7    821.5    16.2       2.0%
Gross Margin %
   59.0 % 57.9 %
Marketing expenses
   280.0    232.3    47.6       20.5%
Selling, general & administrative expenses
   169.5    159.8    9.7       6.1%




Operating income
   388.3    429.4    (41.1)       (9.6%)
Operating Income Margin %
   27.4 % 30.3 %
Interest expense
   60.1    46.8    13.3       28.4%
Other expense, net
   2.5    0.1    2.5       +100.0%
Early extinguishment of debt
   1.3    —      1.3       +100.0%




Income before income taxes
   324.3    382.5    (58.2)       (15.2%)
Provision for income taxes
   124.8    141.8    (17.0)       (12.0%)




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




Net income attributable to the Company
   $ 199.4    $ 241.2    $ (41.8)       (17.3%)




Weighted average diluted shares outstanding
   62.5    74.0    (11.6)       (15.6%)




Diluted EPS
   $ 3.19    $ 3.26    $ (0.07)       (2.0%)

~~Note: Totals may not sum due to rounding.~~

~~Consolidated Results~~

~~Revenues~~

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. Excluding the impact of foreign currency, which negatively impacted our revenues for the first nine months of fiscal 2012 by $24.1 million, net revenues in the first nine months of fiscal 2012 grew 1.8% versus the prior year period. Revenue growth in the first 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 nine months of fiscal 2012. Our Continental European meetings business, which benefited from new marketing strategies, also contributed to revenue growth on a constant currency basis. This revenue growth in our Continental European meetings business was more than offset by revenue declines in the NACO and UK meetings businesses as they cycled against the momentum of their new program innovations, and stronger and more effective marketing and public relations efforts, in the first nine months of fiscal 2011. In addition, in the first 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 by macro-economic factors, particularly consumer confidence, in NACO and the United Kingdom.

The combination of the above factors also led to a 4.6% decline in global meeting paid weeks in the first 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 29.5% in Online paid weeks, as well as a 19.5% increase in end of period active Online subscribers, in the first 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 a 10.7% increase in global paid weeks in the first nine months of fiscal 2012 versus the prior year period. Global attendance in the first nine months of fiscal 2012 declined 10.2% in comparison to the first nine months of fiscal 2011.

~~Gross Profit and Operating Income~~

Gross profit for the first nine months of fiscal 2012 of $837.7 million increased $16.2 million, or 2.0%, from $821.5 million in the first 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 nine months of fiscal 2012 was $388.3 million, a decrease of $41.1 million, or 9.6%, from $429.4 million in the first nine months of fiscal 2011. Excluding the impact of foreign currency, which negatively impacted operating income for the first nine months of fiscal 2012 by $6.8 million, operating income in the first nine months of fiscal 2012 decreased by $34.3 million, or 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 nine months of fiscal 2012 increased to 59.0% from 57.9% in the first nine months of fiscal 2011, but operating income margin in the first nine months of fiscal 2012 declined to 27.4% from 30.3% in the first nine months of fiscal 2011. See “—Components of Expenses and Margins” for additional details.

~~Net Income and Earnings Per Share~~

Net income attributable to the Company in the first nine months of fiscal 2012 declined 17.3% from $241.2 million in the first nine months of fiscal 2011 to $199.4 million. In addition to the decline in operating income, higher interest expense resulting from our financing of our repurchase of shares in the Tender Offer and related share repurchase from Artal Holdings, 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 nine months of fiscal 2012.

Earnings per fully diluted share in the first nine months of fiscal 2012 were $3.19, a decrease of $0.07 from $3.26 in the first nine months of fiscal 2011. Earnings per fully diluted share in the second 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 62.5 million from 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.

~~Components of Revenue and Volumes~~

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.

~~Meeting Fees~~

Global meeting fees for the first nine months of fiscal 2012 were $724.2 million, a decrease of $47.7 million, or 6.2%, from $771.9 million in the prior year period. Excluding the impact of foreign currency, which decreased our global meeting fees for the first nine months of fiscal 2012 by $12.1 million, global meeting fees in the first nine months of fiscal 2012 decreased by 4.6% versus the prior year period. The decline in meeting fees was driven by a 4.6% decline in global meeting paid weeks in the first nine months of fiscal 2012 to 77.3 million from 81.1 million in the prior year period. The decline in meeting paid weeks was driven by lower enrollments in the first 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 41.0 million in the first nine months of fiscal 2012 from 45.6 million in the first nine months of fiscal 2011.

In NACO, meeting fees in the first nine months of fiscal 2012 were $506.2 million, a decrease of $28.7 million, or 5.4%, from $534.9 million in the first nine months of fiscal 2011. The decline in meeting fees was driven primarily by a 5.1% decline in NACO meeting paid weeks from 54.0 million in the first nine months of fiscal 2011 to 51.2 million in the first nine months of fiscal 2012. The decline in meeting paid weeks primarily resulted from lower enrollments in the first nine months of fiscal 2012 as compared to the historically high enrollment levels in the prior year period. Lower enrollments in the first 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 nine months of fiscal 2012, NACO attendance decreased 10.6% to 25.7 million from 28.8 million in the first nine months of fiscal 2011.

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

In the first nine months of fiscal 2012, UK meeting fees decreased by 12.5% to $80.9 million from $92.5 million in the first nine months of fiscal 2011. Excluding the impact of foreign currency, which decreased UK meeting fees for the first nine months of fiscal 2012 by $1.9 million, UK meeting fees declined by 10.5% in the first nine months of fiscal 2012 versus the prior year period. First nine months fiscal 2012 meeting fees were driven lower primarily by a decline of 9.4% in UK meeting paid weeks in the period versus the prior year period. Meeting paid weeks performance in the first nine months of fiscal 2012 was driven by lower enrollments in the period as compared to the historically high enrollment levels in the prior year period. In addition, in the first 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 15.2% in the first nine months of fiscal 2012 versus the prior year period.

Meeting fees in Continental Europe decreased 1.5% to $104.8 million in the first nine months of fiscal 2012 from $106.4 million in the first nine months of fiscal 2011. Excluding the impact of foreign currency, which decreased Continental European meeting fees for the first nine months of fiscal 2012 by $9.2 million, Continental European meeting fees increased by 7.2% in the first 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 9.3% in Continental European meeting paid weeks in the first nine months of fiscal 2012 versus the prior year period. The increase in meeting paid weeks was driven by higher enrollments in the first 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 3.9% in the first nine months of fiscal 2012 versus the prior year period.

~~In-Meeting Product Sales~~

Global in-meeting product sales for the first nine months of fiscal 2012 were $206.3 million, a decrease of $28.6 million, or 12.2%, from $234.9 million in the first nine months of fiscal 2011. Excluding the impact of foreign currency, which decreased in-meeting product sales for the first nine months of fiscal 2012 by $4.3 million, global in-meeting product sales in the first nine months of fiscal 2012 declined 10.3% versus the prior year period. This decrease resulted primarily from a 10.2% decline in global meeting attendance in the first nine months of fiscal 2012 versus the prior year period. In addition, lower product sales per attendee in the first nine months of fiscal 2012 versus the prior year period drove the balance of the decline. On a per attendee basis, the first nine months of fiscal 2012 global in-meeting product sales decreased 2.2%, or 0.2% on a constant currency basis, versus the prior year period. This decrease in in-meeting product sales per attendee in the first 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 nine months fiscal 2012 in-meeting product sales of $117.9 million decreased by $13.6 million, or 10.4%, versus the prior year period. This decrease resulted primarily from a 10.6% attendance decline in the first nine months of fiscal 2012 as compared to the prior year period. In-meeting product sales per attendee increased slightly by 0.2%, or 0.4% on a constant currency basis, in the first nine months of fiscal 2012 versus the prior year period as sales of consumables and new product categories offset the decline in sales of enrollment products.

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

~~Internet Revenues~~

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 $87.2 million, or 29.1%, to $386.8 million in the first nine months of fiscal 2012 from $299.5 million in the first nine months of fiscal 2011. Excluding the impact of foreign currency, which decreased Internet revenues for the first nine months of fiscal 2012 by $5.9 million, Internet revenues grew by 31.1% in the first 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 2011 and effective marketing campaigns in North America and Continental Europe contributed to Online paid weeks growth of 29.5% in the first nine months of fiscal 2012 versus the prior year period. Additionally, end of period active Online subscribers increased by 19.5% to 2.1 million at the end of the first nine months of fiscal 2012 as compared to 1.7 million at the end of the first nine months of fiscal 2011.

~~Other Revenues~~

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 $101.6 million for the first nine months of fiscal 2012, a decrease of $9.9 million, or 8.9%, from $111.6 million for the first nine months of fiscal 2011. Excluding the impact of foreign currency, which decreased other revenues for the first nine months of fiscal 2012 by $1.8 million, other revenues were 7.3% lower in the first nine months of fiscal 2012 compared to the prior year period. Franchise commissions and sales of products to our franchisees declined in the aggregate by 21.9%, or 20.9% on a constant currency basis, in the first nine months of fiscal 2012 versus the prior year period. Our by mail product sales and revenues from our publications also declined in the aggregate by 15.9%, or 14.1% on a constant currency basis, in the first nine months of fiscal 2012 versus the prior year period. These declines were primarily the result of comparing against the prior year period which had the benefit of the new program launches in our

English-speaking markets in late fiscal 2010. Global licensing revenues increased by 3.3%, or 5.2% on a constant currency basis, in the first 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 nine months of fiscal 2012 decreased 1.1% versus the prior year period.

~~Components of Expenses and Margins~~

~~Cost of Revenues and Gross Margin~~

Total cost of revenues in the first nine months of fiscal 2012 was $581.2 million, a decrease of $15.2 million, or 2.6%, from $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 nine months of fiscal 2012 of $837.7 million increased $16.2 million, or 2.0%, from $821.5 million in the first nine months of fiscal 2011. Gross margin in the first nine months of fiscal 2012 was 59.0%, as compared to 57.9% in the first 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~~

Marketing expenses for the first nine months of fiscal 2012 were $280.0 million, an increase of $47.6 million, or 20.5%, versus the first nine months of fiscal 2011. Excluding the impact of foreign currency, which decreased marketing expenses for the first nine months of fiscal 2012 by $4.5 million, marketing expenses were 22.4% higher in the first nine months of fiscal 2012 compared to the prior year period. Included in our first nine months of fiscal 2012 marketing expenses were investments in two initiatives: 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. 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 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 19.7% in the first nine months of fiscal 2012 as compared to 16.4% in the prior year period.

~~Selling, General and Administrative~~

Selling, general and administrative expenses were $169.5 million for the first nine months of fiscal 2012 versus $159.8 million for the first nine months of fiscal 2011, an increase of $9.7 million, or 6.1%. Excluding the impact of foreign currency, which decreased selling, general and administrative expenses for the first nine months of fiscal 2012 by $2.5 million, first nine months of fiscal 2012 selling, general and administrative expenses increased by 7.6% versus the first 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 these initiatives. Lower bonus expense globally related to business performance partially offset this increase. Selling, general and administrative expenses as a percentage of revenue for the first nine months of fiscal 2012 increased to 11.9% from 11.3% for the first nine months of fiscal 2011.

~~Operating Income Margin~~

Our operating income margin in the first nine months of fiscal 2012 decreased to 27.4%, a decrease of 2.9% from 30.3% in the first 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. Both marketing expenses and selling, general and administrative expenses increased as a percentage of revenue in the first nine months of fiscal 2012 as compared to the prior year period.

~~Interest Expense and Other~~

Interest expense was $60.1 million for the first nine months of fiscal 2012, an increase of $13.3 million, or 28.4%, from $46.8 million in the first 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 0.73% to 2.87% in the first nine months of fiscal 2012 from 2.14% in the first nine months of fiscal 2011. Our average debt outstanding increased by $770.7 million to $1,995.7 million in the first nine months of fiscal 2012 from $1,225.0 million in the first 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 3.64% in the first nine months of fiscal 2012, as compared to 4.66% in the first nine months of fiscal 2011.

The Company incurred $2.5 million of other expense in the first nine months of fiscal 2012 as compared to $0.1 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.

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

Tax

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

~~RECENT DEVELOPMENTS~~

~~The impact of Hurricane Sandy~~2013 and ~~its aftermath is expected to negatively impact our paid weeks, attendance, revenue and net income in~~ the ~~fourth~~first quarter of fiscal 2012.

LIQUIDITY AND CAPITAL RESOURCES

~~Sources and Uses of Cash – Fiscal 2012~~

~~Cash and cash equivalents were $80.6 million at the end of the third quarter of fiscal 2012, an increase of $33.1 million from the end of fiscal 2011.~~ Cash flows provided by operating activities have historically supplied us with a significant source of liquidity. We use these cash flows, supplemented with long-term debt and short-term borrowings, to fund our operations and global initiatives, pay dividends, repurchase stock, pay down debt and opportunistically engage in franchise acquisitions. 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.

Balance Sheet Working Capital

The following table sets forth certain relevant measures of our balance sheet working capital at:


	March 30,			December 29,			Increase/
	2013			2012			(Decrease)
	(in millions)
Total current assets	$	273.8		$	218.0		$	55.8
Total current liabilities		586.3			447.9			138.4

Working capital deficit		(312.5	)		(229.9	)		82.6
Cash and cash equivalents		121.4			70.2			51.2
Current portion of long-term debt		204.2			114.7			89.5

Working capital deficit, excluding change in cash and cash equivalents and current portion of long-term debt	$	(229.7	)	$	(185.4	)	$	44.3

We generally operate with negative working capital. This is driven in part by our commitment plans which are our primary payment method. These plans require members and subscribers to pay us for meetings and subscription products, respectively, before we pay for our obligations in the normal course of business. These prepayments are recorded as a current liability on our balance sheet which results in negative working capital. Our working capital deficit increased $82.6 million to $312.5 million at March 30, 2013 from $229.9 million at December 29, 2012. After making scheduled debt repayments of $57.3 million which were offset by revolver borrowings of $51.0 million in the first quarter of fiscal 2013, and the impact of the borrowings that we undertook in March and April 2012, the current portion of our long-term debt increased by $89.5 million versus the end of fiscal 2012 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 March 30, 2013 increased by $44.3 million to $229.7 million from $185.4 million at December 29, 2012. The primary factors contributing to this increase in our working capital deficit were a $29.4 million increase in deferred revenue, due to the seasonal growth in our Online subscriber and Monthly Pass member bases, and a timing related increase of $15.5 million in income tax liabilities offset by a $0.6 million net decrease to the working capital deficit resulting from other operational items.

These other operational items that resulted in the net decrease of $0.6 million to the working capital deficit included a $12.1 million increase in other accrued liabilities and a $2.6 million reduction in inventory. These increases to the working capital deficit were offset by a $7.3 million reduction in the previously reported UK self-employment liability related to a payment to Her Majesty’s Revenue and Customs, or HMRC, a $5.0 million increase in accounts receivable and a $3.0 million reduction in the derivative payable.

Cash Flows

The following table sets forth a summary of the Company’s cash flows for the three months ended:


	March 30,			March 31,
	2013			2012
	(in millions)
Net cash provided by operating activities	$	115.2		$	104.8
Net cash used in investing activities	$	(58.2	)	$	(21.0	)
Net cash used in financing activities	$	(3.1	)	$	(52.8	)

Operating Activities

First Quarter of Fiscal 2013

Cash flows provided by operating activities of $115.2 million for the first ~~nine months~~quarter of fiscal ~~2012 were $301.2~~2013 increased by $10.4 million ~~a decrease of $73.7~~from $104.8 million ~~or 19.7%, from the $374.9 million generated~~ in the first ~~nine months~~quarter of fiscal ~~2011. This decrease~~2012. The increase in cash provided by operating activities was primarily the result of a $30.0 million payment in the first quarter of fiscal 2012 to HMRC, as disclosed in the Company’s Annual Report on Form 10-K for fiscal 2012, as compared to an aggregate payment of $7.2 million (including expenses) to HMRC and our advisors in the first quarter of fiscal 2013. This increase in cash provided by operating activities was slightly offset by lower net income in the first ~~nine months~~quarter of fiscal ~~2012 versus~~2013 as compared to the prior year, ~~period and a payment of $30.0 million~~as well as changes 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.working capital.

The ~~$301.2~~$115.2 million of cash flows provided by operating activities for the first ~~nine months~~quarter of fiscal ~~2012~~2013 exceeded the period’s net income ~~attributable to the Company~~ by ~~$101.7~~$66.4 million. The excess of cash flows provided by operating activities over net income arose primarily from changes in our working capital as described ~~below~~above (see “—Balance Sheet Working Capital”), non-cash expenses and differences between book and cash taxes.

~~Net~~First Quarter of Fiscal 2012

The $104.8 million of cash ~~used~~flows provided by operating activities for ~~investing and financing activities combined totaled $257.2 million in~~ the first ~~nine months~~quarter of fiscal ~~2012.~~ 2012 exceeded the period’s net income by $50.2 million. The excess of cash flows provided by operating activities over net income arose primarily from changes in our working capital, non-cash expenses and differences between book and cash taxes.

Investing Activities

First Quarter of Fiscal 2013

Net cash used for investing activities ~~was $71.6~~totaled $58.2 million in the first ~~nine months~~quarter of fiscal ~~2012 and consisted~~2013, an increase of $37.2 million as compared to the ~~following: capital expenditures in connection with our retail initiative; capitalized software expenditures~~first quarter of fiscal 2012. This increase was primarily attributable to ~~support global systems initiatives; and~~ the $35.0 million purchase price paid in

connection with our acquisition of substantially all of the assets of our ~~Southeastern Ontario~~Alberta and ~~Ottawa,~~Saskatchewan, Canada ~~franchisee.~~ franchisees, Weight Watchers of Alberta Ltd. and Weight Watchers of Saskatchewan Ltd. In addition, we incurred capital expenditures in connection with the move of our headquarters, our retail initiative and capitalized software expenditures to support global systems initiatives.

First Quarter of Fiscal 2012

For the first quarter of fiscal 2012, cash used for investing activities was primarily attributable to capital expenditures in connection with our retail initiative and capitalized software expenditures to support global systems initiatives.

Financing Activities

First Quarter of Fiscal 2013

Net cash used for financing activities totaled ~~$185.5~~$3.1 million in the ~~period~~first quarter of fiscal 2013 and included ~~stock repurchases~~payments on term loans under the WWI Credit Facility of ~~$1.5 billion and deferred financing costs of $25.5~~$57.3 million ~~partially~~ offset by additional revolver borrowings of $51.0 million. In addition, we received $2.6 million in proceeds from stock options exercised in the first quarter of fiscal 2013. In the fourth quarter of fiscal 2012, our Board of Directors declared a quarterly cash dividend and accelerated its payment to December 2012 instead of having it paid in January 2013 as it has typically done for fourth quarter dividend declarations.

First Quarter of Fiscal 2012

Net cash used for financing activities totaled $52.8 million in the first quarter of fiscal 2012 and included proceeds from new term loans under the WWI Credit Facility of ~~$1.45 billion~~$726.0 million which were used to finance stock repurchases of $724.3 million and deferred financing costs of $24.8 million in connection with the Tender Offer and related Artal Holdings share 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 ~~$86.6~~$27.0 million, ~~and dividend payments~~we paid $13.0 million of ~~$32.5 million,~~dividends to our shareholders and received ~~$13.9~~$8.0 million ofin proceeds from stock options exercised in the first ~~nine months~~quarter of fiscal 2012.

~~Sources and Uses of Cash – Fiscal 2011~~Long-Term Debt

~~Cash and cash equivalents were $61.4 million at the end of the third quarter of fiscal 2011, an increase of $20.9 million from the end of fiscal 2010. Cash flows provided~~We currently plan to meet our long-term debt obligations by operating activities for the first nine months of fiscal 2011 were $374.9 million, an increase of $140.0 million, or 59.6%, over the $234.9 million generated in the first nine months of fiscal 2010. The increase of $140.0 million inusing cash flows provided by operating activities ~~was primarily the result of improvements in~~and opportunistically using other means to repay or refinance our business in the first nine months of fiscal 2011 versus the comparable prior year period. These business improvements included a $95.9 million increase in net income, and $16.5 million of higher deferred income resulting from significant increases in Online subscribers and Monthly Pass members. In addition, in the first 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.obligations as we determine appropriate.

The $374.9 million of cash flows provided by operating activities for the first nine months of fiscal 2011 exceeded net income attributable to the Company by $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 $354.9 million in the first nine months of fiscal 2011. Net cash used for investing activities was $31.0 million in the first nine months of fiscal 2011, consisting primarily of capital expenditures and capitalized software expenditures. Net cash used for financing activities totaled $323.9 million in the period and consisted primarily of long-term debt payments of $298.3 million, stock repurchases of $34.9 million and dividend payments of $38.7 million. These uses were partially offset by $41.4 million of proceeds from stock options exercised in the first nine months of fiscal 2011.

~~Balance Sheet Working Capital~~

On our balance sheet at September 29, 2012, the working capital deficit was $274.0 million, which included $80.6 million of cash and cash equivalents and $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 $86.6 million during the first nine months of fiscal 2012, and despite the borrowings that we undertook in March and April 2012, the current portion offollowing schedule sets forth our long-term debt ~~increased only by $8.9 million versus~~obligations at March 30, 2013:

Long-Term Debt

At March 30, 2013

(in millions)


	Balance
Revolver A-1 due June 30, 2014	$	17.2
Revolver A-2 due March 15, 2017		63.8
Term B Loan due January 26, 2014		129.1
Term C Loan due June 30, 2015		112.2
Term D Loan due June 30, 2016		117.9
Term E Loan due March 15, 2017		1,139.8
Term F Loan due March 15, 2019		820.0

Total Debt		2,400.0
Less Current Portion		204.2

Total Long-Term Debt	$	2,195.8

Our credit facilities at 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 September 29, 2012 increased by $18.6 million to $220.8 million from $202.2 million at December 31, 2011.

The increase of $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 nine months of fiscal 2012 versus the December 31, 2011 level was primarily attributable to operational items. Operational items increased the deficit by $61.2 million. These operational items included a $20.4 million increase in deferred revenue from growth in our Online subscriber and Monthly Pass member bases, seasonality-related reductions of $13.3 million in inventory, and a $6.2 million decrease in

accounts receivable plus a $21.3 million increase in accrued liabilities. These increases in working capital deficit were partially offset by a $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 and a $7.6 million decline in~~2013 consisted of the ~~derivative liability.~~

~~Long-Term Debt~~

~~Our credit facilities consist of certain~~following 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 pursuant to the Purchase Agreement.

~~Immediately prior to the amendment of the WWI Credit Facility, the term loan facilities consisted of~~facilities: 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 A-1, or Revolver A-1 and revolving credit facility A-2, 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. OnAt 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 September 29, 2012,30, 2013, we had ~~$2,414.6~~$2,400.0 million outstanding under ~~the WWI Credit Facility, consisting entirely of term loans and there were no loans outstanding under any of the revolving credit~~these facilities. In addition, at ~~September 29, 2012,~~March 30, 2013, the Revolver A-1 had $0.2 million in issued but undrawn letters of credit outstanding thereunder and ~~$70.5~~$53.2 million in available unused commitments thereunder and the Revolver A-2 had ~~$0.7~~$0.9 million in issued but undrawn letters of credit outstanding thereunder and ~~$261.3~~$197.3 million in available unused commitments thereunder.

At ~~September~~March 30, 2013 and December 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 3.01% and ~~2.40%~~2.99% per annum at ~~September~~March 30, 2013 and December 29, 2012, respectively. At March 30, 2013, these term loan facilities and revolving credit facilities bore interest at a rate, and the commitment fee for each revolving facility was at a rate, equal to that at December ~~31, 2011, respectively.~~29, 2012. For additional information regarding the interest rates and commitment fees related to these facilities, see “Liquidity and Capital Resources—Long-Term Debt” in the Company’s Annual Report on Form 10-K for fiscal 2012. At March 30, 2013, we were in compliance with all of the required financial ratios and also met all of the financial condition tests set forth in our then existing credit facilities.

The following schedule sets forth our ~~long-term~~year-by-year debt obligations at ~~September 29, 2012:~~March 30, 2013:

~~Long-Term~~Total Debt Obligation

(Including Current Portion)

At ~~September 29, 2012~~March 30, 2013

(in millions)

   Balance
Term A-1 Loan due January 26, 2013
   $ 57.3
Term B Loan due January 26, 2014
   129.8
Term C Loan due June 30, 2015
   115.4
Term D Loan due June 30, 2016
   118.5
Term E Loan due March 15, 2017
   1,169.5
Term F Loan due March 15, 2019
   824.1


Total Debt
   2,414.6
Less Current Portion
   133.8


Total Long-Term Debt
   $ 2,280.8


Remainder of fiscal 2013	$	57.4
Fiscal 2014		298.4
Fiscal 2015		227.3
Fiscal 2016		209.3
Fiscal 2017		827.0
Thereafter		780.6

Total	$	2,400.0

~~The~~ WWI Credit Facility Refinancing

After the end of our first fiscal quarter of fiscal 2013, on April 2, 2013, we refinanced our credit facilities pursuant to a Credit Agreement, or the New Credit Agreement, among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and an issuing bank, The Bank of Nova Scotia, as revolving agent, swingline lender and an issuing bank, and the other parties thereto. The New Credit Agreement provides ~~that term~~for (a) a revolving credit facility (including swing line loans and letters of credit) in an initial aggregate principal amount of $250.0 million that will mature on April 2, 2018, or the Revolving Facility, (b) an initial term B-1 loan credit facility in an aggregate principal amount of $300.0 million that will mature on April 2, 2016, or Tranche B-1 Term Facility, and (c) an initial term B-2 loan credit facility in an aggregate principal amount of $2,100.0 million that will mature on April 2, 2020, or Tranche B-2 Term Facility. We refer herein to the Tranche B-1 Term Facility together with the Tranche B-2 Term Facility as the Term Facilities, and the Term Facilities and Revolving Facility collectively as the WWI Credit Facility. In connection with this refinancing, we used the proceeds from borrowings under the Term Facilities to pay off a total of $2,399.9 million of outstanding loans, ~~outstanding~~consisting of $128.8 million of Term B Loans, $110.6 million of Term C Loans, $117.6 million of Term D Loans, $1,125.0 million of Term E Loans, $817.9 million of Term F Loans, $21.2 million of loans under the Revolver A-1 and $78.8 million of loans under the Revolver ~~A-2 bear interest~~A-2. Following the refinancing of a total of $2,399.9 million of loans, 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 September 29, 2012,April 2, 2013, we had $2,400.0 million debt outstanding under the Term ~~A-1 Loan bore~~Facilities and $248.8

million of availability under the Revolving Facility. The proceeds from borrowings under the Revolving Facility (including swing line loans and letters of credit) will be used for working capital and general corporate purposes. Borrowings under the New Credit Agreement bear interest at a rate equal to, ~~LIBO Rate (Reserve Adjusted)~~at our option, LIBOR plus an applicable margin or a base rate plus an applicable margin. Borrowings under the Tranche B-1 Term Facility initially bear interest at LIBOR plus an applicable margin of 2.75% or base rate plus an applicable margin of 1.75%. Borrowings under the Tranche B-2 Term Facility initially bear interest at LIBOR plus an applicable margin of 3.00% or base rate plus an applicable margin of 2.00%. Borrowings under the Revolving Facility initially bear interest at LIBOR or base rate plus an applicable margin which will fluctuate depending upon our total leverage ratio. At our total leverage ratio as of April 2, 2013, borrowings under the Revolving Facility bear interest at LIBOR plus an applicable margin of 2.25% or base rate plus an applicable margin of 1.25% ~~per annum;~~. LIBOR under the Tranche B-2 Term Facility is subject to a minimum interest rate of 0.75% and the base rate under the Tranche B-2 Term Facility is subject to a minimum interest rate of 1.75%. The applicable margin relating to both of the Term ~~B Loan bore interest at~~Facilities will increase by 25 basis points in the event that we receive a ~~rate equal to LIBO Rate (Reserve Adjusted) plus 1.50% per annum; the Term C Loan bore interest at~~corporate rating of BB- from S&P (or lower) and a ~~rate equal to LIBO Rate (Reserve Adjusted) plus 2.25% per annum; the Term D Loan bore interest at~~corporate rating of Ba3 from Moody’s (or lower). On a ~~rate equal to LIBO Rate (Reserve Adjusted) plus 2.25% per annum; the Term E Loan bore interest at~~quarterly basis, we will pay a rate equal to LIBO Rate (Reserve Adjusted) plus 2.25% per annum; the Term F Loan bore interest at a rate equal to LIBO Rate (Reserve Adjusted) plus 3.00% per annum; had any loans under the Revolver A-1 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 been outstanding, they would have borne interest at a rate equal to LIBO Rate (Reserve Adjusted) plus 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~~the Revolving Facility in respect of ~~the Revolver A-1 and the Revolver A-2 with respect to the unused~~unutilized 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 September 29, 2012, the applicable~~thereunder, which commitment fee ~~rate for~~will fluctuate depending upon our total leverage ratio. At our total leverage ratio as of April 2, 2013, the ~~Revolver A-1 was 0.50% per annum and for the Revolver A-2 was~~commitment fee will be 0.40% per annum. We also will pay customary letter of credit fees and fronting fees under the Revolving Facility. In connection, with this refinancing, we incurred fees of approximately $45.0 million during the second quarter of fiscal 2013. In the second quarter of fiscal 2013, we expect to record a charge of $21.7 million in early extinguishment of debt primarily reflecting the write-off of a portion of previously capitalized deferred financing costs.

The ~~WWI~~New Credit ~~Facility~~Agreement 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~~Revolving Facility also requires us to maintain a specified financial ~~ratios and satisfy certain financial condition tests. At September 29, 2012, we were in compliance with all~~ratio, but only if borrowings under the Revolving Facility exceed 20.0% of the ~~required financial ratios and also met all of the financial condition tests, and expect to continue to~~revolving commitments. The Term Facilities 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~~not require us to ~~make loan modification offers to all lenders of~~maintain 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.financial ratios.

The following ~~schedule sets~~schedules set forth our long-term debt obligations and our year-by-year debt obligations at ~~September 29, 2012:~~

~~Total Debt Obligation~~

~~(Including Current Portion)~~

~~At September 29, 2012~~

~~(in millions)~~April 2, 2013:

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


Total
   $ 2,414.6


Long-Term Debt			Total Debt Obligation
At April 2, 2013			(Including Current Portion)
(in millions)			At April 2, 2013
			(in millions)

	Balance
			Remainder of fiscal 2013	$	12.0
Revolving Facility April 2, 2018	$	—	Fiscal 2014		30.0
Tranche B-1 Term Facility due April 2, 2016		300.0	Fiscal 2015		24.0
Tranche B-2 Term Facility due April 2, 2020		2,100.0	Fiscal 2016		307.5

Total Debt		2,400.0	Fiscal 2017		21.0
Less Current Portion		18.0	Thereafter		2,005.5

Total Long-Term Debt	$	2,382.0	Total	$	2,400.0

~~We currently plan to meet~~

The following table summarizes our ~~long-term debt obligations by using cash flows provided by operating activities and opportunistically using other means to repay or refinance our~~future contractual obligations as ~~we determine appropriate. We believe~~of the end of fiscal 2012 had the New Credit Agreement been in place at 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.time:


			Payment Due by Period
	Total		Less than 1 Year			1-3 Years			3-5 Years			More than 5 Years
			(in millions)
Long-Term Debt⁽¹⁾
Principal	$	2,400.0	$	12.0		$	54.0		$	328.5		$	2,005.5
Interest		590.9		67.2			197.6			155.8			170.3
Operating leases		274.5		40.0			67.8			45.7			121.0
Other long-term obligations⁽²⁾		3.5		(1.5	)		(1.8	)		(1.3	)		8.1

Total	$	3,268.9	$	117.7		$	317.6		$	528.7		$	2,304.9

(1)	Due to the fact that all of our debt is variable rate based, we have assumed for purposes of this table that the interest rate on all of our debt as of the end of fiscal 2012 remains constant for all periods presented.

(2)

“Other long-term obligations” primarily consist of deferred rent costs. The provision for income tax contingencies included in other long-term liabilities on the consolidated balance sheet is not included in the table above due to the fact that the Company is unable to estimate the timing of payment for this liability.

Dividends and Stock Transactions

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. In the fourth quarter of fiscal 2012, our Board of Directors declared such a quarterly cash dividend and accelerated its payment to December 2012 instead of having it paid in January 2013 as it has typically done for fourth quarter dividend declarations. 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 this program. The repurchase program currently has no expiration date. During the ~~nine~~three months ended ~~September 29,~~March 30, 2013 and March 31, 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 nine months ended 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 and third quarters no shares of its common 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~~then existing credit facilities to finance these repurchases. ~~See “—Long-Term Debt”.~~For additional information regarding the Tender Offer and these repurchases, see “Liquidity and Capital Resources” in the Company’s Annual Report on Form 10-K for fiscal 2012.

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~~$100.0 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.~~3.25:1. 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.

OFF-BALANCE SHEET TRANSACTIONS

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.

SEASONALITY

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 generally supports the three key ~~enrollment-generating~~recruitment-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~~regard 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.

AVAILABLE INFORMATION

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 atwww.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%~~10 percent shareholders. Usually these are publicly accessible no later than the business day following the filing. We use our website atwww.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.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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~~2012 have not materially changed from December ~~31, 2011, other than as described below.~~29, 2012.

As of ~~September 29, 2012,~~March 30, 2013, we had entered into interest rate swaps with notional amounts totaling ~~$640.5~~$470.0 million to hedge a portion of our variable rate debt. As of such date, ~~$1,774.1~~$1,930.0 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 ~~$640.5~~$470.0 million. Changes in the fair value of these derivatives will be recorded each period in earnings for non-qualifying derivatives or accumulated other comprehensive income (loss) for qualifying derivatives. Based on the amount of our variable rate debt and interest rate swap agreements as of ~~September 29, 2012,~~March 30, 2013, 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 ~~$8.9~~$9.7 million. This change in market risk exposure from the end of fiscal ~~2011~~2012 was ~~driven by~~due to the ~~additional borrowings in connection with~~reduction of the ~~repurchases~~notional amount of ~~shares~~our interest rate swaps from $583.2 million at the end 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.fiscal 2012 to $470.0 million at March 30, 2013.

ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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 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 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 principal financial officer concluded that the design and operation of our disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

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.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

~~UK Self-Employment Matter~~

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 been 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 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 third quarter of fiscal 2012 equaled approximately $14.7 in the aggregate based on the exchange rates at the end of the third quarter of fiscal 2012. Although we disagree with the First Tier Tribunal’s adverse ruling and believe we have valid grounds to obtain a reversal on appeal, we are currently in discussions with HMRC to determine if this matter can be settled prior to the January 2013 appeal hearing date.

~~Other Litigation Matters~~

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.

ITEM 1A. RISK FACTORS

There have been no material changes in the risk factors from those detailed in our Annual Report on Form 10-K for fiscal ~~2011.~~2012.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Nothing to report under this item.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

Nothing to report under this item.

~~ITEM 4.~~

~~MINE SAFETY DISCLOSURES~~

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

~~ITEM 5.~~

~~OTHER INFORMATION~~

~~Nothing~~ITEM 5.OTHER INFORMATION

Departure of President, Europe

As previously reported, Melanie Stubbing, President, Europe, will be resigning from the Company effective May 10, 2013. On May 7, 2013, the Company and Ms. Stubbing entered into a consulting agreement pursuant to ~~report under this item.~~which Ms. Stubbing has agreed to provide consulting services to the Company on an as-needed basis through August 31, 2013, at a per diem rate of £1,500.

Modifications to Chief Financial Officer Benefits

On May 8, 2013, the Company entered into a letter agreement with Nicholas Hotchkin, Chief Financial Officer, pursuant to which the Company has agreed to provide Mr. Hotchkin the following additional relocation benefits in connection with his relocation from Massachusetts to the New York metropolitan area:

if Mr. Hotchkin’s right to reimbursement of reasonable temporary living costs pursuant to his original employment offer letter is terminated as a result of his purchase or rental of a residence in the New York metropolitan area, then Mr. Hotchkin will be entitled to reimbursement (on a tax grossed-up basis) for any monthly mortgage payment (to be pro-rated, as applicable) payable by him for his current Massachusetts residence with respect to any period of time prior to August 20, 2013, the twelve-month anniversary of his employment start date; and

in connection with the sale of his current Massachusetts residence, the Company has agreed to provide Mr. Hotchkin home price protection (on a tax grossed-up basis) of up to $100,000.

Modifications to Annual, Performance-Based Cash Bonus Plan

On May 7, 2013, the Compensation and Benefits Committee of the Board of Directors (the “Compensation Committee”) approved certain modifications to the Company’s annual, performance-based cash bonus plan for fiscal 2013 for certain participants. These adjustments are intended to continue to incentivize those participants to maximize 2013 performance given the challenging first quarter recruitment environment. Specifically, with respect to our named executive officers who are eligible to receive a fiscal 2013 annual, performance-based cash bonus (other than the Chief Executive Officer and Michael Basone whose pro rata portion is subject to the terms of his retention agreement), the Compensation Committee approved a new bonus payout approach based on a bonus opportunity equal to 75% of the participant’s target and financial performance goal ratings determined by performance against operating income targets that are lower than the operating income targets based on the Company’s initial internal annual operating plan. The threshold percentage of target operating income required for payment of an annual bonus under the new payout approach, however, is 85% of the new operating income targets (rather than 75% under the original payout approach) and the maximum payout will apply at 110% of the new operating income targets. Actual payouts under the new payout approach remain subject to the executive officer’s individual performance rating for the fiscal year.

~~ITEM 6.~~

~~EXHIBITS~~

ITEM 6.EXHIBITS


Exhibit Number		Description

*Exhibit 10.1		~~Second Amended and Restated~~Credit Agreement dated as of April 2, 2013 among Weight Watchers ~~Executive Profit Sharing Plan, August 1, 2012~~International, Inc., as the Borrower, the Lenders party thereto, JPMorgan Chase Bank, N.A., as the Administrative Agent and an Issuing Bank, and The Bank of Nova Scotia, as the Revolving Agent, a Swingline Lender and an Issuing Bank.

†**Exhibit 10.2		Letter Agreement, dated as of February 12, 2013, by and between Weight Watchers International, Inc. and Michael Basone (filed as Exhibit 10.35 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2012 (File No. 001-16769) and incorporated herein by reference).

*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
*EX-101.SCH		XBRL Taxonomy Extension Schema
*EX-101.CAL		XBRL Taxonomy Extension Calculation Linkbase
*EX-101.DEF		XBRL Taxonomy Extension Definition Linkbase
*EX-101.LAB		XBRL Taxonomy Extension Label Linkbase
*EX-101.PRE		XBRL Taxonomy Extension Presentation Linkbase

*	Filed herewith.

**	Previously filed.

†	Represents a management arrangement or compensatory plan.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




Date: ~~November 8, 2012~~May 9, 2013	By:	/s/ Nicholas P. Hotchkin
		Nicholas P. Hotchkin
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

EXHIBIT INDEX


Exhibit Number		Description
*Exhibit 10.1		Credit Agreement dated as of April 2, 2013 among Weight Watchers International, Inc., as the Borrower, the Lenders party thereto, JPMorgan Chase Bank, N.A., as the Administrative Agent and an Issuing Bank, and The Bank of Nova Scotia, as the Revolving Agent, a Swingline Lender and an Issuing Bank.

†**Exhibit ~~10.1~~10.2		~~Second Amended~~Letter Agreement, dated as of February 12, 2013, by and ~~Restated~~between Weight Watchers ~~Executive Profit Sharing Plan, August 1,~~International, Inc. and Michael Basone (filed as Exhibit 10.35 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2012 (File No. 001-16769) and incorporated herein by reference).

*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

*	Filed herewith.

**	Previously filed.

†	Represents a management arrangement or compensatory plan.


	Three Months Ended					Nine Months Ended
	September 29,		October 1,			September 29,		October 1,
	2012		2011			2012		2011
Net income	$	67,364	$	80,650		$	199,431	$	240,683
Other comprehensive income:
Foreign currency translation adjustments, net of tax^(a)		1,243		(6,014	)		1,018		(3,139	)
Current period changes in fair value of derivatives, net of tax^(b)		1,167		1,021			4,866		6,511

Total other comprehensive income		2,410		(4,993	)		5,884		3,372

Comprehensive income		69,774		75,657			205,315		244,055
Comprehensive loss attributable to the noncontrolling interest		0		0			0		523

Comprehensive income attributable to Weight Watchers International, Inc.	$	69,774	$	75,657		$	205,315	$	244,578


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

	$	148,616	$	103,722	$	128,249	$	90,788


Remainder of fiscal 2012	$	4,172
Fiscal 2013	$	17,394
Fiscal 2014	$	13,470
Fiscal 2015	$	7,336
Fiscal 2016	$	2,407


	Three Months Ended September 29, 2012
	WWI		WW.com		Consolidated
Total revenue	$	305,657	$	124,953	$	430,610


Depreciation and amortization	$	8,660	$	2,363	$	11,023


Operating income	$	60,476	$	71,508	$	131,984

Interest expense						23,225
Other income, net						(756	)
Provision for taxes						42,151

Net income					$	67,364


	Three Months Ended October 1, 2011
	WWI		WW.com		Consolidated
Total revenue	$	325,584	$	102,850	$	428,434


Depreciation and amortization	$	6,323	$	2,587	$	8,910


Operating income	$	82,378	$	55,921	$	138,299

Interest expense						13,655
Other expense, net						285
Provision for taxes						43,709

Net income					$	80,650


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

Cost of revenues		581.2			596.4			(15.2)		(2.6%)

Gross profit		837.7			821.5			16.2		2.0%
Gross Margin %		59.0	%		57.9	%

Marketing expenses		280.0			232.3			47.6		20.5%
Selling, general & administrative expenses		169.5			159.8			9.7		6.1%

Operating income		388.3			429.4			(41.1)		(9.6%)
Operating Income Margin %		27.4	%		30.3	%

Interest expense		60.1			46.8			13.3		28.4%
Other expense, net		2.5			0.1			2.5		+100.0%
Early extinguishment of debt		1.3			—			1.3		+100.0%

Income before income taxes		324.3			382.5			(58.2)		(15.2%)

Provision for income taxes		124.8			141.8			(17.0)		(12.0%)

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

Net income attributable to the Company	$	199.4		$	241.2		$	(41.8)		(17.3%)


Weighted average diluted shares outstanding		62.5			74.0			(11.6)		(15.6%)


Diluted EPS	$	3.19		$	3.26		$	(0.07)		(2.0%)


	Balance
Term A-1 Loan due January 26, 2013	$	57.3
Term B Loan due January 26, 2014		129.8
Term C Loan due June 30, 2015		115.4
Term D Loan due June 30, 2016		118.5
Term E Loan due March 15, 2017		1,169.5
Term F Loan due March 15, 2019		824.1

Total Debt		2,414.6
Less Current Portion		133.8

Total Long-Term Debt	$	2,280.8


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

Total	$	2,414.6

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