(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 ☒ 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 ☒ No ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) 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 ☒

The number of shares of common stock outstanding as of ~~October~~July 31, ~~2017~~2019 was ~~64,530,211.~~67,297,697.

	September 30,			December 31,			June 29,			December 29,
	2017			2016			2019			2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	178,247		$	108,656		$	180,645		$	236,974
Receivables (net of allowances: September 30, 2017 - $1,994 and December 31, 2016 - $2,973)		22,267			27,518
Receivables (net of allowances: June 29, 2019 - $1,591 and December 29, 2018 - $1,743)								30,869			27,247
Inventories		23,421			32,629			30,625			25,851
Prepaid income taxes		33,446			35,528			15,171			33,997
Prepaid expenses and other current assets		23,166			30,880			26,793			42,355
TOTAL CURRENT ASSETS		280,547			235,211			284,103			366,424

Property and equipment, net		48,755			49,574			51,131			52,202
Operating lease assets								144,913			0
Franchise rights acquired		754,652			748,619			753,216			751,134
Goodwill		170,731			166,138			154,058			152,519
Trademarks and other intangible assets, net		48,829			58,612
Other intangible assets, net								58,491			57,162
Deferred income taxes								16,235			16,230
Other noncurrent assets		11,978			12,822			14,128			18,870
TOTAL ASSETS	$	1,315,492		$	1,270,976		$	1,476,275		$	1,414,541

LIABILITIES AND TOTAL DEFICIT
CURRENT LIABILITIES
Portion of long-term debt due within one year	$	31,429		$	21,000		$	57,750		$	77,000
Portion of operating lease liabilities due within one year								32,003			0
Accounts payable		19,388			40,639			26,761			27,098
Salaries and wages payable		51,867			49,638			56,699			64,600
Accrued marketing and advertising		15,929			18,067			9,796			14,052
Accrued interest		16,425			16,939			28,025			28,651
Other accrued liabilities		54,383			51,251			43,232			48,218
Derivative payable		21,129			31,974			19,330			5,578
Income taxes payable								19,679			22,618
Deferred revenue		82,660			62,880			56,923			53,501
TOTAL CURRENT LIABILITIES		293,210			292,388			350,198			341,316

Long-term debt		1,884,842			1,981,299
Long-term debt, net								1,584,460			1,669,708
Long-term operating lease liabilities								121,318			0
Deferred income taxes		187,676			175,115			184,445			190,258
Other		30,480			25,048			2,251			18,289
TOTAL LIABILITIES		2,396,208			2,473,850			2,242,672			2,219,571

Redeemable noncontrolling interest		4,636			4,699			3,763			3,913

TOTAL DEFICIT
Common stock, $0 par value; 1,000,000 shares authorized; 118,947 shares issued at September 30, 2017 and at December 31, 2016		0			0

Treasury stock, at cost, 54,422 shares at September 30, 2017 and 55,021 shares at December 31, 2016		(3,214,938	)		(3,237,346	)
Common stock, $0 par value; 1,000,000 shares authorized; 120,352 shares issued at June 29, 2019 and December 29, 2018								0			0
Treasury stock, at cost, 53,089 shares at June 29, 2019 and 53,396 shares at December 29, 2018								(3,164,409	)		(3,175,624	)
Retained earnings		2,144,459			2,056,893			2,420,958			2,382,438
Accumulated other comprehensive loss		(14,873	)		(27,120	)		(26,709	)		(15,757	)
TOTAL DEFICIT		(1,085,352	)		(1,207,573	)		(770,160	)		(808,943	)
TOTAL LIABILITIES AND TOTAL DEFICIT	$	1,315,492		$	1,270,976		$	1,476,275		$	1,414,541

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

	Three Months Ended					Nine Months Ended					Three Months Ended				Six Months Ended
	September 30,		October 1,			September 30,			October 1,		June 29,		June 30,		June 29,		June 30,
	2017		2016			2017			2016		2019		2018		2019		2018
Service revenues, net	$	273,219	$	232,571		$	817,696		$	727,889	$	313,768	$	343,730	$	620,494	$	672,399
Product sales and other, net		50,468		48,248			176,726			169,601		55,255		66,017		111,694		145,571
Revenues, net		323,687		280,819			994,422			897,490		369,023		409,747		732,188		817,970

Cost of services		118,073		111,515			363,284			355,945		122,121		128,159		251,078		267,939
Cost of product sales and other		28,526		25,001			100,943			86,521		31,088		36,794		64,347		84,236
Cost of revenues		146,599		136,516			464,227			442,466		153,209		164,953		315,425		352,175
Gross profit		177,088		144,303			530,195			455,024		215,814		244,794		416,763		465,795

Marketing expenses		30,310		30,078			158,707			157,791		49,967		55,421		164,216		154,340
Selling, general and administrative expenses		55,400		47,433			153,671			143,152		60,374		61,665		125,176		121,676
Operating income		91,378		66,792			217,817			154,081		105,473		127,708		127,371		189,779

Interest expense		26,993		28,329			82,227			86,963		34,732		35,866		69,927		71,732
Other expense (income), net		125		(146	)		278			397
Gain on early extinguishment of debt		0		0			(1,554	)		0
Other expense, net												438		1,333		741		1,097
Income before income taxes		64,260		38,609			136,866			66,721		70,303		90,509		56,703		116,950

Provision for income taxes		19,593		3,989			36,457			12,420		16,586		19,825		13,711		7,208
Net income		44,667		34,620			100,409			54,301		53,717		70,684		42,992		109,742
Net loss attributable to the noncontrolling interest		52		38			135			99		117		36		156		90
Net income attributable to Weight Watchers International, Inc.	$	44,719	$	34,658		$	100,544		$	54,400	$	53,834	$	70,720	$	43,148	$	109,832

Earnings Per Share attributable to Weight Watchers International, Inc.
Basic	$	0.69	$	0.54		$	1.57		$	0.85	$	0.80	$	1.07	$	0.64	$	1.67
Diluted	$	0.65	$	0.53		$	1.48		$	0.83	$	0.78	$	1.01	$	0.62	$	1.57

Weighted average common shares outstanding													��
Basic		64,463		63,782			64,237			63,690		67,124		66,400		67,044		65,761
Diluted		68,686		65,841			67,939			65,872		69,141		70,154		69,268		69,914

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

Three Months Ended

Nine Months Ended

September 30,

October 1,

September 30,

October 1,

2017

2016

2017

2016

Net income

$
44,667

$
34,620

$
100,409

$
54,301

Other comprehensive gain :

Foreign currency translation gain (loss)

5,673

(1,496
)

$
11,704

10,167

Income tax (expense) benefit on foreign currency translation gain (loss)

(2,206
)

583

(4,559
)

(3,935
)
Foreign currency translation gain (loss), net of taxes

3,467

(913
)

7,145

6,232

Gain (loss) on derivatives

4,105

8,136

8,482

(9,984
)
Income tax (expense) benefit on gain (loss) on derivatives

(1,601
)

(3,173
)

(3,308
)

3,863

Gain (loss) on derivatives, net of taxes

2,504

4,963

5,174

(6,121
)
Total other comprehensive gain

5,971

4,050

12,319

111

Comprehensive income

50,638

38,670

112,728

54,412

Less: Net loss attributable to the noncontrolling interest

52

38

135

99

Less: Foreign currency translation (gain) loss, net of taxes
attributable to the noncontrolling interest

(113
)

19

(72
)

(450
)
Comprehensive (income) loss attributable to the noncontrolling interest

(61
)

57

63

(351
)
Comprehensive income attributable to Weight Watchers International, Inc.

$
50,577

$
38,727

$
112,791

$
54,061

	Three Months Ended						Six Months Ended
	June 29,			June 30,			June 29,			June 30,
	2019			2018			2019			2018
Net income	$	53,717		$	70,684		$	42,992		$	109,742
Other comprehensive (loss) gain:
Foreign currency translation gain (loss)		1,801			(3,804	)		3,515			(7,229	)
Income tax (expense) benefit on foreign currency translation gain (loss)		(457	)		965			(892	)		1,833
Foreign currency translation gain (loss), net of taxes		1,344			(2,839	)		2,623			(5,396	)
(Loss) gain on derivatives		(10,819	)		1,130			(18,180	)		12,297
Income tax benefit (expense) on (loss) gain on derivatives		2,744			(287	)		4,611			(3,119	)
(Loss) gain on derivatives, net of taxes		(8,075	)		843			(13,569	)		9,178
Total other comprehensive (loss) gain		(6,731	)		(1,996	)		(10,946	)		3,782
Comprehensive income		46,986			68,688			32,046			113,524
Net loss attributable to the noncontrolling interest		117			36			156			90
Foreign currency translation (gain) loss, net of taxes attributable to the noncontrolling interest		(12	)		137			(6	)		373
Comprehensive loss attributable to the noncontrolling interest		105			173			150			463
Comprehensive income attributable to Weight Watchers International, Inc.	$	47,091		$	68,861		$	32,196		$	113,987

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

					Weight Watchers International, Inc.

															Accumulated
	Redeemable														Other
Three Months Ended June 29, 2019	Noncontrolling				Common Stock				Treasury Stock						Comprehensive			Retained
	Interest				Shares		Amount		Shares			Amount			Loss			Earnings			Total
Balance at March 30, 2019		$	3,868			120,352	$	0		53,375		$	(3,174,871	)	$	(19,966	)	$	2,375,903			$	(818,934	)

Comprehensive income (loss)			(105	)												(6,743	)		53,834				47,091

Issuance of treasury stock under stock plans										(286	)		10,462						(13,651	)			(3,189	)
Compensation expense on share- based awards																			4,872				4,872
Balance at June 29, 2019		$	3,763			120,352	$	0		53,089		$	(3,164,409	)	$	(26,709	)	$	2,420,958			$	(770,160	)

					Weight Watchers International, Inc.
															Accumulated
	Redeemable														Other
Six Months Ended June 29, 2019	Noncontrolling				Common Stock				Treasury Stock						Comprehensive			Retained
	Interest				Shares		Amount		Shares			Amount			Loss			Earnings			Total
Balance at December 29, 2018		$	3,913			120,352	$	0		53,396		$	(3,175,624	)	$	(15,757	)	$	2,382,438			$	(808,943	)

Comprehensive income (loss)			(150	)												(10,952	)		43,148				32,196

Issuance of treasury stock under stock plans										(307	)		11,215						(14,312	)			(3,097	)
Compensation expense on share- based awards																			9,684				9,684
Balance at June 29, 2019		$	3,763			120,352	$	0		53,089		$	(3,164,409	)	$	(26,709	)	$	2,420,958			$	(770,160	)

					Weight Watchers International, Inc.

															Accumulated
	Redeemable														Other
Three Months Ended June 30, 2018	Noncontrolling				Common Stock				Treasury Stock						Comprehensive			Retained
	Interest				Shares		Amount		Shares			Amount			Loss			Earnings			Total
Balance at March 31, 2018		$	4,177			120,352	$	0		54,114		$	(3,203,331	)	$	(6,938	)	$	2,210,168			$	(1,000,101	)

Comprehensive income (loss)			(173	)												(1,859	)		70,720				68,861

Issuance of treasury stock under stock plans										(349	)		13,535						(14,586	)			(1,051	)
Compensation expense on share- based awards																			5,291				5,291
Issuance of common stock																							0
Balance at June 30, 2018		$	4,004			120,352	$	0		53,765		$	(3,189,796	)	$	(8,797	)	$	2,271,593			$	(927,000	)

					Weight Watchers International, Inc.
															Accumulated
	Redeemable														Other
Six Months Ended June 30, 2018	Noncontrolling				Common Stock				Treasury Stock						Comprehensive			Retained
	Interest				Shares		Amount		Shares			Amount			Loss			Earnings			Total
Balance at December 30, 2017		$	4,467			118,947	$	0		54,258		$	(3,208,836	)	$	(10,467	)	$	2,203,317			$	(1,015,986	)

Comprehensive income (loss)			(463	)												4,155			109,832				113,987

Issuance of treasury stock under stock plans										(493	)		19,040						(17,033	)			2,007
Compensation expense on share- based awards																			9,675				9,675
Issuance of common stock						1,405													9,796				9,796
Cumulative effect of revenue accounting change																			2,933				2,933
Cumulative effect of tax accounting change																(2,485	)		(46,927	)			(49,412	)
Balance at June 30, 2018		$	4,004			120,352	$	0		53,765		$	(3,189,796	)	$	(8,797	)	$	2,271,593			$	(927,000	)

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

	Nine Months Ended						Six Months Ended
	September 30,			October 1,			June 29,			June 30,
	2017			2016			2019			2018
Operating activities:
Net income	$	100,409		$	54,301		$	42,992		$	109,742
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		38,331			39,145			22,693			21,774
Amortization of deferred financing costs		4,292			4,631
Impairment of intangible and long-lived assets		670			91
Write-off of net assets due to cessation of Spain operations		70			0
Amortization of deferred financing costs and debt discount								4,680			4,122
Share-based compensation expense		9,372			4,366			9,684			9,675
Deferred tax provision		6,393			9,171
Deferred tax (benefit) provision								(2,294	)		752
Allowance for doubtful accounts		(775	)		43			(303	)		54
Reserve for inventory obsolescence		6,280			3,823			4,244			8,338
Foreign currency exchange rate loss		158			222			527			868
Gain on early extinguishment of debt		(1,840	)	0
Changes in cash due to:
Receivables		6,768			2,546			982			(9,650	)
Inventories		4,821			(4,830	)		(8,608	)		4,999
Prepaid expenses		9,711			(8,313	)		26,599			(3,023	)
Accounts payable		(19,622	)		(7,209	)		656			(798	)
Accrued liabilities		(21,459	)		(20,123	)		(20,447	)		(1,696	)
Deferred revenue		16,692			12,199			2,920			13,259
Other long term assets and liabilities, net		5,907			2,726			(2,185	)		(4,309	)
Income taxes		18,627			1,128			(2,346	)		14,480
Cash provided by operating activities		184,805			93,917			79,794			168,587

Investing activities:
Capital expenditures		(10,755	)		(4,556	)		(7,601	)		(7,733	)
Capitalized software expenditures		(20,242	)		(21,888	)		(16,208	)		(13,118	)
Cash paid for acquisitions		0			(2,898	)
Other items, net		(130	)		(174	)		120			(9,669	)
Cash used for investing activities		(31,127	)		(29,516	)		(23,689	)		(30,520	)

Financing activities:
Payments on revolver		0			(48,000	)
Net payments on revolver								0			(25,000	)
Payments on long-term debt		(88,387	)		(160,073	)		(107,750	)		(38,500	)
Taxes paid related to net share settlement of equity awards		(4,894	)		0			(4,227	)		(11,139	)
Excess tax benefit of share-based compensation		0			964
Proceeds from stock options exercised		4,925			35			326			23,262
Payment of dividends		0			(11	)
Other items, net								(218	)		0
Cash used for financing activities		(88,356	)		(207,085	)		(111,869	)		(51,377	)
Effect of exchange rate changes on cash and cash equivalents		4,269			202			(565	)		(1,989	)
Net increase (decrease) in cash and cash equivalents		69,591			(142,482	)
Net (decrease) increase in cash and cash equivalents								(56,329	)		84,701
Cash and cash equivalents, beginning of period		108,656			241,526			236,974			83,054
Cash and cash equivalents, end of period	$	178,247		$	99,044		$	180,645		$	167,755

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

The accompanying consolidated financial statements include the accounts of Weight Watchers International, Inc. and all of its subsidiaries. The terms “Company” and ~~“WWI”~~“WW” as used throughout these notes isare used to indicate Weight Watchers International, Inc. and all of its operations consolidated for purposes of its financial statements. The Company’s ~~“meetings”~~“Digital” business refers to providing subscriptions to the Company’s digital product offerings, including the Personal Coaching + Digital product. The Company’s “Studio + Digital” business refers to providing access to the Company’s weekly in-person workshops combined ~~meetings and~~with the Company’s digital subscription product offerings to ~~the Company’s~~ commitment plan ~~subscribers (including Total Access subscribers), as well as~~subscribers. The “Studio + Digital” business also includes the provision of access to ~~meetings~~workshops for members who do not subscribe to commitment plans, including the Company’s “pay-as-you-go” ~~members and other meetings~~ members. ~~“Online” refers to Weight Watchers Online, Weight Watchers OnlinePlus, Personal Coaching and other digital subscription products.~~

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information 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 include all of the Company’s majority-owned subsidiaries. All entities acquired, and any entity of which a majority interest was acquired, are included in the consolidated financial statements from the date of acquisition. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s operating results for any interim period are not necessarily indicative of future or annual results. The consolidated financial statements are unaudited and, accordingly, they do not include all of the information necessary for a comprehensive presentation of results of operations, financial position and cash flow activity required by GAAP for complete financial statements 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.

These statements should be read in conjunction with the Company’s Annual Report on Form 10-K for fiscal ~~2016~~2018 filed on ~~March 1, 2017,~~February 26, 2019, which includes additional information about the Company, its results of operations, its financial position and its cash flows.

In the third quarter of fiscal 2016, the Company identified and recorded out-of-period adjustments primarily to reverse a foreign tax receivable originally recorded in fiscal 2008 that should have been reversed in fiscal 2009. The impact of these income tax errors, which increased provision for income taxes and decreased net income attributable to the Company by $2,684, was immaterial to prior period financial statements and thus corrected in the third quarter of fiscal 2016.

For a discussion of the Company’s 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 2018. For a discussion of accounting standards adopted in the current period, see Note 3.

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued updated guidance regarding leases, requiring lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with the exception of short-term leases. For lessees, leases will continue to be classified as either operating or finance leases in the income statement. Lessor accounting is similar to the current model but will be updated to align with certain changes to the lessee model. Lessors will continue to classify leases as operating, direct financing or sales-type leases. The effective date of the new guidance for public companies is for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The new guidance must be adopted using a modified retrospective transition and requires application of the new guidance at the beginning of the earliest comparative period presented. The updated guidance is effective for the Company beginning in the first quarter of fiscal 2019. The Company is currently evaluating the impact that the adoption of this guidance will have on the consolidated financial statements and related disclosures of the Company.

In ~~March 2016,~~July 2018, the FASB issued updated guidance on revenue from contracts with customers, which is intended to clarify the implementation guidance on principal versus agent considerations. The amendments in this update do not change the core principle of the guidance, but are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations by ~~including indicators to assist~~providing an entity ~~in determining whether it controls a specified good or service before it is transferred~~with an additional and optional transition method to the customer. In April 2016, the FASB issued updated guidance on revenue from contracts with customers, which is intended to clarify guidance related to identifying performance obligations and licensing implementation guidance contained inadopt the new ~~revenue recognition standard. In May 2016,~~lease guidance. On December 30, 2018, the FASB issued updated guidance on revenue from contracts with customers, which is intended to provide narrow scope guidance and practical expedients contained in the new revenue standard. In December 2016, the FASB issued updated guidance on revenue from contracts with customers for technical corrections and improvements on narrow aspects within the original and amended guidance. The amendments in these updates are effective for annual periods beginning after December 15, 2017 and interim periods within those fiscal years, with early adoption permitted. The Company ~~continues to make~~

~~progress in its assessment of~~adopted the updated ~~guidance and in evaluating the effect of adoption on the consolidated financial statements.~~ ~~The Company plans on adopting this~~lease guidance on a modified retrospective ~~basis. While~~basis as of the ~~completion~~adoption date. Periods prior to the adoption date continue to be reported under the historical lease accounting guidance. See Note 4 for further details.

On December 30, 2018, the Company adopted the updated guidance on leases using the modified retrospective transition method. Results for reporting periods beginning on or after December 30, 2018 are presented under the updated guidance, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical lease accounting.

The adoption of the standard had a material impact on the ~~progress to date, the Company does~~Company’s consolidated balance sheets but did not ~~expect the new standard will~~ have a material impact on its ~~revenue recognition accounting policy or its consolidated financial statements.~~

In January 2017, the FASB issued amended guidance to simplify the accounting for goodwill impairment. This guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the amended guidance, a goodwill impairment charge will now be recognized for the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill. This guidance is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for any impairment tests performed after January 1, 2017. The Company is currently evaluating the impact that the adoption of this guidance will have on the consolidated financial statements and related disclosures of the Company.

In August 2017, the FASB issued amended guidance to improve accounting for hedging activities. The amendments in this update better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This guidance is effective for interim and annual periods beginning after December 15, 2018. Early adoption is permitted as of the issuance date. The Company plans to adopt this guidance the first day of the fourth quarter of fiscal 2017, which will not have a material impact on the consolidated financial statements and related disclosures of the Company.

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 2016. For a discussion of accounting standards adopted in the current year, see Note 3.

In March 2016, the FASB issued updated guidance on stock compensation which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification of applicable income tax consequences on the statement of cash flows. This guidance requires recognition of excess tax benefits and shortfalls (resulting from an increase or decrease in the fair value of an award from grant date to the vesting date) in the provision for income taxes as a discrete item in the quarterly period in which they occur. In addition, these amounts will be classified as an operating activity in the consolidated statement of cash flows instead of as a financing activity. The amendments requiring recognition of excess tax benefits and tax shortfalls in the income statement must be applied prospectively (See Note 10), and entities may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective or retrospective transition method. In May 2017, the FASB issued updated guidance on stock compensation which is intended to clarify when changes to the terms and conditions to a share-based payment transaction requires modification accounting.

~~The company adopted this guidance during the first quarter of fiscal 2017. As required by the standard, the Company recognized prospectively any excess tax benefits in the~~ consolidated statements of net income for the three and nine months ended September 30, 2017 and applied the amendments relating to the presentation of excess tax benefits on the statement of cash flows using the prospective method. For the first nine months ended October 1, 2016, the Company recorded $588 of excess tax benefits in equity. For the first nine months ended October 1, 2016, the Company paid taxes of $1,978 related to net share settlement of equity awards. As permitted under the guidance, the Company will continue to account for forfeitures in compensation cost by estimating the number of awards that are expected to vest.

In August 2016, the FASB issued updated guidance on the statement of cash flows presentation of certain transactions where diversity in practice exists. The Company adopted this guidance during the first quarter of 2017, which had no impact on the consolidated statement of cash flows.

In January 2017, the FASB issued updated guidance to assist Companies with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company early adopted this guidance during the first quarter of 2017. The adoption of this guidance had no impact on the consolidated financial statements.

On October 18, 2015 (the “Agreement Date”), the Company entered into the following agreements with Oprah Winfrey: the Strategic Collaboration Agreement, the Winfrey Purchase Agreement (defined below), and the Winfrey Option Agreement (defined below). The transactions contemplated by these agreements are collectively referred to herein as the “Winfrey Transaction”. Details of the Strategic Collaboration Agreement, Winfrey Purchase Agreement and Winfrey Option Agreement are below. See Note 16 for related party transactions with Ms. Winfrey.

The Company and Ms. Winfrey granted each other certain intellectual property rights under the Strategic Collaboration Agreement. The agreement has an initial term of five years, with additional successive one-year renewal terms. During the term of this agreement, Ms. Winfrey will consult with the Company and participate in developing, planning, executing and enhancing the Weight Watchers program and related initiatives, and provide it with services in her discretion to promote the Company and its programs, products and services.

On October 19, 2015, pursuant to the Share Purchase Agreement between the Company and Ms. Winfrey (the “Winfrey Purchase Agreement”), the Company issued and sold to Ms. Winfrey an aggregate of 6,362 shares of the Company’s common stock (the “Purchased Shares”) at a price per share of $6.79 for an aggregate cash purchase price of $43,199.income. The Company recorded ~~fees related to the issuance of the Purchased Shares totaling $2,315, of which $1,700 was recorded~~$155,178 as a reduction of equity in the fourth quarter of fiscal 2015. The Purchased Shares are subject to certain demand registration rights and piggyback rights held by Ms. Winfrey under the Winfrey Purchase Agreement.

The Purchased Shares were not transferrable by Ms. Winfrey within the first two years of the Agreement Date, subject to certain limited exceptions. Thereafter, Ms. Winfrey may generally transfer up to 15% of the Purchased Shares prior to the third anniversary of the Agreement Date, up to 30% prior to the fourth anniversary of the Agreement Date and up to 60% prior to the fifth anniversary of the Agreement Date. On or after the fifth anniversary of the Agreement Date, Ms. Winfrey will be permitted to transfer all of the Purchased Shares. In the event that Ms. Winfrey proposes to transfer any Purchased Shares or Winfrey Option Shares (defined below), the Company will have (a) a right of ~~first offer with respect to such shares if such transfer is (i) for 1% or more~~use asset, $163,486 of the Company’s issued and outstanding common stock and is proposed to be made pursuant to Rule 144 under the Securities Act of 1933, as amended or (ii) proposed to be sold under a resale shelf registration statement or (b) a right of first refusal with respect to such shares if such transfer is (i) for 1% or more of the Company’s issued and outstanding common stock and is proposed to be made to a competitor of the Company or (ii) for 5% or more of the Company’s issued and outstanding common stock. Such transfer restrictions, right of first offer and right of first refusal terminate if Ms. Winfrey then has the right to be nominated as a director and has met certain eligibility requirements under the Winfrey Purchase Agreement, but is not elected as a director of the Company. If Ms. Winfrey is elected as a director of the Company, she shall receive compensation for her services as a director consistent with that of other non-executive directors of the Company. Such transfer restrictions also terminate if there is a change of control, including if another person (or group), other than Artal Luxembourg S.A. and Ms. Winfrey and their respective affiliates, acquires more than 50% of the total voting power of the Company.

In consideration of Ms. Winfrey entering into the Strategic Collaboration Agreement and the performance of her obligations thereunder, on the Agreement Date, the Company granted Ms. Winfrey a fully vested option (the “Winfrey Option”) to purchase 3,513 shares of common stock at an exercise price of $6.97 per share, which remains outstanding in full. The term sheet, and related terms and conditions, for the Winfrey Option are referred to herein as the “Winfrey Option Agreement”. Based on the Black Scholes option pricing method, the Company recorded $12,759 of compensation expense in the fourth quarter of fiscal 2015 for the Winfrey Option. At the date of the grant, the Company used a dividend yield of 0.0%, 63.88% volatility and a risk-free interest rate of 1.36%. Compensation expense is included as a component of selling, general and administrative expenses.lease

~~Subject to certain limited exceptions, shares of common stock issuable~~liabilities and $0 for retained earnings for operating leases upon ~~exercise~~adoption of the ~~Winfrey Option (the “Winfrey Option Shares”) generally could not be transferred~~updated guidance. The previously reported amounts have been revised by ~~Ms. Winfrey within the first year of the Agreement Date. Ms. Winfrey generally could have transferred up to 20% of the Winfrey Option Shares prior~~$3,595 due to the ~~second anniversary~~impact of prepaid rent. The standard did not have a material impact on the ~~Agreement Date,~~Company’s finance lease contracts.

A lease is defined as an arrangement that contractually specifies the right to use and ~~generally may transfer up to 40% prior to the third anniversary~~control an identified asset for a specific period of ~~the Agreement Date, up to 60% prior to the fourth anniversary~~time in exchange for consideration. Operating leases are included in operating lease assets, portion of ~~the Agreement Date~~operating lease liabilities due within one year, and up to 80% prior to the fifth anniversary of the Agreement Date. On or after the fifth anniversary of the Agreement Date, Ms. Winfrey will be permitted to transfer all of the Winfrey Option Shares. Pursuant to the Winfrey Purchase Agreement,long-term operating lease liabilities in the ~~event~~Company’s 2019 consolidated balance sheet. Finance leases are included in property and equipment, net, other accrued liabilities, and other long-term liabilities in the Company’s 2019 consolidated balance sheet. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term, using the Company’s incremental borrowing rate commensurate with the lease term. The lease asset includes scheduled lease payments and excludes lease incentives, such as free rent periods and tenant improvement allowances. The Company has certain leases that ~~Ms. Winfrey proposes~~may include an option to ~~transfer any Winfrey Option Shares,~~renew and when it is reasonably probable to exercise such option, the Company will include the renewal option terms in determining the lease asset and lease liability. The Company does not have any renewal options that would have a ~~right~~material impact on the terms of ~~first offer~~the leases and that are also reasonably expected to be exercised at this time. A lease may contain both fixed and variable payments. Variable lease payments that are linked to an index or rate are measured based on the current index or rate at adoption of the updated guidance, or lease commencement date for new leases, with the impact of future changes in the index or rate being recorded as a ~~right~~period expense. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The Company’s operating and finance leases are primarily for its studios, corporate offices, data centers and certain equipment, including automobiles.

At June 29, 2019, the Company’s lease assets and lease liabilities were as follows:

For the three and six months ended June 29, 2019, the components of ~~first refusal~~the Company’s lease expense were as follows:

The Company has elected the short-term lease exception accounting policy, whereby the recognition requirements of the updated guidance is not applied and lease expense is recorded on a straight-line basis with respect to ~~such shares as described above. Such transfer restrictions terminate under the same director service and change~~leases with an initial term of ~~control circumstances that would result in the termination of the transfer restrictions relating to the Purchased Shares as described above.~~12 months or less.

On ~~June 27, 2016,~~December 31, 2017, the Company ~~acquired substantially all~~adopted the updated guidance on revenue from contracts with customers using the modified retrospective method applied to those contracts which were not completed as of December 31, 2017. Results for reporting periods beginning after December 31, 2017 are presented under the updated guidance, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historical revenue accounting.

The Company recorded a net increase to opening retained earnings of $2,145 as of December 31, 2017 due to the cumulative impact of adopting the updated guidance, inclusive of a $3,501 decrease to deferred revenue, a decrease of $568 to prepaid expenses and other current assets and an increase to the deferred income tax liability of $788.

Revenues are recognized when control of the ~~assets~~promised services or goods is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those services or goods.

The Company earns revenue from subscriptions for its digital products and by conducting workshops, for which it charges a fee, predominantly through commitment plans, prepayment plans or the “pay-as-you-go” arrangement. The Company also earns revenue by selling consumer products (including publications) in its workshops, online through its ecommerce platform and to its franchisees, collecting commissions from franchisees, collecting royalties related to licensing agreements, selling magazine subscriptions, publishing, selling advertising space on its websites and in copies of its ~~franchisee~~publications and By Mail product sales.

Commitment plan revenues, prepaid workshop fees and magazine subscription revenue are recorded to deferred revenue and amortized into revenue as control is transferred over the period earned since these performance obligations are satisfied over time. Digital subscription revenues, consisting of the fees associated with subscriptions for ~~certain territories in South Florida, Weight Watchers of Greater Miami, Inc., for~~the Company’s Digital products, including its

Personal Coaching + Digital product, are deferred and recognized on a ~~purchase price of $3,250 (the “Miami Acquisition”). Payment was~~straight-line basis as control is transferred over the subscription period. One-time Digital sign-up fees are considered immaterial in the ~~form~~context of ~~cash ($2,898) plus cash~~the contract and the related revenue is recorded to deferred revenue and amortized into revenue over the commitment period. In the Studio + Digital business, the Company generally charges non-refundable registration and starter fees in ~~reserves ($300)~~exchange for access to the Company’s digital subscription products, an introductory information session and ~~assumed net liabilities~~materials it provides to new members. Revenue from these registration and starter fees is considered immaterial in the context of ~~($52).~~ the contract and is recorded to deferred revenue and amortized into revenue over the commitment period. Revenue from “pay-as-you-go” workshop fees, consumer product sales and By Mail, commissions and royalties is recognized at the point in time control is transferred, which is when services are rendered, products are shipped to customers and title and risk of loss passes to the customers, and commissions and royalties are earned, respectively. Revenue from advertising in magazines and from magazine sales is recognized upon distribution of the magazine. For revenue transactions that involve multiple performance obligations, the amount of revenue recognized is determined using the relative fair value approach, which is generally based on each performance obligation’s stand-alone selling price. Discounts to customers, including free registration offers, are recorded as a deduction from gross revenue in the period such revenue was recognized. Revenue from advertising on its websites is recognized when the advertisement is viewed by the user.

The ~~total purchase price~~Company grants refunds in aggregate amounts that historically have not been material. Because the period of payment of the refund generally approximates the period revenue was originally recognized, refunds are recorded as a reduction of revenue over the same period.

The following table presents the Company’s revenues disaggregated by revenue source:

For Service Revenues, the Company typically collects payment in advance of providing services. Any amounts collected in advance of services being provided are recorded in deferred revenue. In the case where amounts are not collected, but the service has been ~~allocated to franchise rights acquired ($114), goodwill ($2,945)~~provided and ~~customer relationship value ($191).~~ the revenue has been recognized, the amounts are recorded in accounts receivable. The ~~acquisition~~opening and ending balances of the ~~franchisee has been accounted~~Company’s deferred revenues are as follows:

Revenue recognized from amounts included in current deferred revenue as of December 29, 2018 was $52,507 for ~~under~~ the ~~purchase method~~six months ended June 29, 2019. The Company’s long-term deferred revenue, which is included in other liabilities on the Company’s consolidated balance sheet, had a balance of ~~accounting and, accordingly, earnings~~$469 at June 29, 2019 related to upfront payments received as an inducement for entering into certain sales-based royalty agreements with third party licensees. This revenue is amortized on a straight-line basis over the term of the ~~acquired franchisee~~applicable agreement.

The Company elected to apply the updated guidance only to contracts that were not completed as of December 31, 2017, the date of adoption. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. The Company expenses sales commissions when incurred (amortization period would have been one year or less) and these expenses are recorded within selling, general and administrative expenses. The Company treats shipping and handling fees as fulfillment costs and not as a separate performance obligation, and as a result, any fees received fromcustomers are included in the ~~consolidated operating results~~transaction price allocated to the performance obligation of providing goods with a corresponding amount accrued within cost of product sales and other for amounts paid to applicable carriers. Sales tax, value-added tax, and other taxes the Company ~~since the date of acquisition. The goodwill will be deductible for tax purposes.~~collects concurrent with revenue-producing activities are excluded from revenue.

Franchise rights acquired are due to acquisitions of the Company’s franchised territories as well as the acquisition of franchise promotion agreements and other factors associated with the acquired franchise territories. For the ~~nine~~six months ended ~~September 30, 2017,~~June 29, 2019, the change in the carrying value of franchise rights acquired is due to the effect of exchange rate changes.

Goodwill primarily relates to the acquisition of the Company by The Kraft Heinz Company (successor to H.J. Heinz ~~Company~~Company) in 1978 and the ~~acquisition~~Company’s acquisitions of WW.com, Inc. (formerly known as WeightWatchers.com, Inc.) in 2005, ~~the acquisitions of~~ the Company’s franchised territories ~~the acquisitions of~~and the majority interest in Vigilantes do Peso Marketing Ltda. ~~(“VPM”) and of Knowplicity, Inc., d/b/a Wello, in fiscal 2014 and the acquisition of Weilos, Inc. in fiscal 2015. See Note 5 for additional information about acquisitions by the Company.~~ For the ~~nine~~six months ended ~~September 30, 2017,~~June 29, 2019, the change in the carrying amount of goodwill iswas due to the effect of exchange rate changes as follows:

The Company reviews goodwill and other indefinite-lived intangible assets, including franchise rights acquired with indefinite lives, for potential impairment on at least an annual basis or more often if events so require. The Company performed fair value impairment testing as of May ~~7, 2017~~5, 2019 and May ~~8, 2016,~~6, 2018, each the first day of fiscal May, on its goodwill and other indefinite-lived intangible assets.

In performing its annual impairment analysis as of May ~~7, 2017,~~5, 2019 and May 6, 2018, the Company determined that the carrying amounts of its goodwill reporting units and franchise rights acquired with indefinite lives units of account did not exceed their respective fair values and therefore no impairment existed.

For all reporting units, except for Brazil, there was significant headroom in the goodwill impairment analysis. Based on the results of ~~this~~the Company’s annual goodwill impairment test performed for all of its reporting units except for Brazil, as of the June 29, 2019 balance sheet date, for reporting units that hold 97.0% of the Company’s goodwill, those units had an estimated fair value at least 60% higher than the respective reporting unit’s carrying amount. Based on the results of the Company’s annual goodwill impairment test performed for its Brazil reporting unit, the estimated fair value of this reporting unit exceeded its carrying value by approximately ~~10%,~~3.0% and accordingly a ~~relatively small~~ change in the underlying assumptions for Brazil would likely cause a change in the results of the impairment assessment and, as such, could result in an impairment of the goodwill related to Brazil, for which the net book value is $4,623.

For all units of account, except for New Zealand, there was significant headroom in the franchise rights acquired impairment analysis. Based on the results of the Company’s annual franchise rights acquired impairment test performed for all of its units of account except for New Zealand, as of the June 29, 2019 balance sheet date, for units of account that hold 99.4% of the Company’s franchise rights acquired, those units had an estimated fair value at least 40% higher than the respective unit of account’s carrying ~~amount~~amount. Based on the results of the Company’s annual franchise rights acquired impairment test performed for its New Zealand unit of account, the estimated fair value of this unit of account exceeded its carrying value by approximately 3.0% and accordingly a change in the underlying assumptions for New Zealand would likely cause a change in the results of the impairment assessment and, as such, could result in an impairment of the franchise rights acquired related to New Zealand, for which the net book value is ~~$20,044.~~$4,754.

When determining fair value, the Company utilizes various assumptions, including projections of future cash flows, growth rates and discount rates. A change in these underlying assumptions would likely cause a change in the results of the tests and, as such, could cause fair value to be less than the carrying amounts and result in an impairment of those assets. In the event such a result occurred, the Company would be required to record a corresponding charge, which would impact earnings. The Company would also be

required to reduce the carrying amounts of the related assets on its balance sheet. The Company continues to evaluate these assumptions and believes that these assumptions are appropriate.

The following is a discussion of the goodwill and franchise rights acquired impairment analysis.

In performing the impairment analysis for goodwill, the fair value for the Company’s reporting units is estimated using a discounted cash flow approach. This approach involves projecting future cash flows attributable to the reporting unit and discounting those estimated cash flows using an appropriate discount rate. The estimated fair value is then compared to the carrying value of the reporting ~~units.~~unit. The Company has determined the appropriate reporting unit for purposes of assessing annual impairment to be the country for all reporting units. For all of the Company’s reporting units except for Brazil (see below), the Company estimated future

cash flows by utilizing the historical debt-free cash flows (cash flows provided by operating activities less capital expenditures) attributable to that country and then applied expected future operating income growth rates for such country. The Company utilized operating income as the basis for measuring its potential growth because it believes it is the best indicator of the performance of its business. The Company then discounted the estimated future cash flows utilizing a discount rate which was calculated using the average cost of capital, which included the cost of equity and the cost of debt. The cost of equity was determined by combining a risk-free rate of return and a market risk premium for the Company’s peer group. The risk-free rate of return was determined based on the average rate of long-term U.S. Treasury securities. The market risk premium was determined by reviewing external market data. The cost of debt was determined by estimating the Company’s current borrowing rate.

As it relates to the goodwill impairment analysis for Brazil, the Company estimated future ~~debt free~~debt-free cash flows in contemplation of its growth strategies for that market. In developing these projections, the Company considered the historical impact of similar growth strategies in other markets as well as the current market conditions in Brazil. The Company then discounted the estimated future cash flows utilizing a discount rate which was calculated using the average cost of capital, which included the cost of equity and the cost of debt. The cost of equity was determined by combining a risk-free rate of return and a market risk premium for the Company’s peer group. The risk-free rate of return was determined based on the average rate of long-term U.S. Treasury securities. The market risk premium was determined by reviewing external market data including the current economic conditions in Brazil and the country specific risk ~~thereon. A further risk premium was included to reflect the risk associated with the rate of growth projected~~thereon, all as reflected in the ~~analysis.~~discount rate. The cost of debt was determined by estimating the Company’s current borrowing rate.

Finite-lived franchise rights acquired are amortized over the remaining contractual period, which is generally less than one year. Indefinite-lived franchise rights acquired are tested on an annual basis for impairment.

In performing the impairment analysis for indefinite-lived franchise rights acquired, the fair value for franchise rights acquired is estimated using a discounted cash flow approach referred to as the hypothetical start-up approach for franchise rights related to the Company’s ~~meetings~~Studio + Digital business and a relief from royalty methodology for franchise rights related to the Company’s ~~Online~~Digital business. The aggregate estimated fair value for these rights is then compared to the carrying value of the unit of account for those franchise rights. The Company has determined the appropriate unit of account for purposes of assessing impairment to be the combination of the rights in both the ~~meetings~~Studio + Digital business and ~~Online businesses~~the Digital business in the country in which the ~~acquisitions have~~applicable acquisition occurred.

In its hypothetical start-up approach analysis for fiscal ~~2017,~~2019, the Company assumed that the year of maturity was reached after 7 years. Subsequent to the year of maturity, the Company estimated future cash flows for the ~~meetings~~Studio + Digital business in each country based on assumptions regarding revenue growth and operating income margins. The cash flows associated with the ~~Online~~Digital business in each country were based on the expected ~~Online~~Digital revenue for such country and the application of a market-based royalty rate. The cash flows for the ~~meetings~~Studio + Digital and ~~Online~~Digital businesses were discounted utilizing rates consistent with those utilized in the annual goodwill impairment analysis.

The carrying values of finite-lived intangible assets as of June 29, 2019 and December 29, 2018 were as follows:

~~The carrying values of finite-lived intangible assets as of September 30, 2017 and December 31, 2016 were as follows:~~

Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of ~~$9,120~~$7,485 and ~~$27,310~~$15,041 for the three and ~~nine~~six months ended ~~September 30, 2017,~~June 29, 2019, respectively. Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of ~~$9,137~~$6,832 and ~~$26,161~~$14,242 for the three and ~~nine~~six months ended ~~October 1, 2016,~~June 30, 2018, respectively. The franchise rights acquired related to the VPM acquisition were amortized ratably over a 2 year period. The franchise rights acquired related to the Miami Acquisition were amortized ratably over a 3 month period.

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

September 30, 2017

December 31, 2016

Principal
Balance

Effective Rate ⁽¹⁾

Principal
Balance

Effective Rate ⁽¹⁾

Revolving Facility due April 2, 2018

$
0

0.00
%

$
0

3.35
%
Tranche B-1 Term Facility due April 2, 2016

0

0.00
%

0

3.96
%
Tranche B-2 Term Facility due April 2, 2020

1,930,386

4.68
%

2,021,250

4.41
%
Total

1,930,386

4.68
%

2,021,250

4.38
%
Less: Current Portion

31,429

21,000

Unamortized Deferred Financing Costs

14,115

18,951

Total Long-Term Debt

$
1,884,842

$
1,981,299

	June 29, 2019									December 29, 2018
	Principal Balance		Unamortized Deferred Financing Costs		Unamortized Debt Discount		Effective Rate ⁽¹⁾			Principal Balance		Unamortized Deferred Financing Costs		Unamortized Debt Discount		Effective Rate ⁽¹⁾
Revolving Credit Facility due November 29, 2022	$	0	$	0	$	0		0.00	%	$	0	$	0	$	0		4.39	%
Term Loan Facility due November 29, 2024		1,374,500		7,342		23,833		8.07	%		1,482,250		8,307		26,033		7.53	%
Notes due December 1, 2025		300,000		1,115		0		8.62	%		300,000		1,202		0		8.69	%
Total	$	1,674,500	$	8,457	$	23,833		8.17	%	$	1,782,250	$	9,509	$	26,033		7.63	%
Less: Current Portion		57,750									77,000
Unamortized Deferred Financing Costs		8,457									9,509
Unamortized Debt Discount		23,833									26,033
Total Long-Term Debt	$	1,584,460								$	1,669,708

~~The Company’s~~On November 29, 2017, the Company refinanced its then-existing credit facilities (hereinafter referred to as “the November 2017 debt refinancing”) consisting of $1,930,386 of borrowings under a term loan facility and an undrawn $50,000 revolving credit facility with $1,565,000 of borrowings under its new credit facilities, consisting of a $1,540,000 term loan facility, and a $150,000 revolving credit facility (of which $25,000 was drawn upon at the ~~end~~time of the ~~first~~November 2017 debt refinancing) (collectively, the “Credit Facilities”), and $300,000 in aggregate principal amount of 8.625% Senior Notes due 2025 (the “Notes”). During the fourth quarter of fiscal ~~2013 consisted~~2017, the Company incurred fees of $53,832 (which included $30,800 of a debt discount) in connection with the ~~following term loan facilities~~November 2017 debt refinancing. In addition, the Company recorded a loss on early extinguishment of debt of $10,524 in connection thereto. This early extinguishment of debt write-off was comprised of $5,716 of deferred financing fees paid in connection with the November 2017 debt refinancing and revolving credit facilities: 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”).$4,808 of pre-existing deferred financing fees.

The Credit Facilities were issued under a new credit agreement, dated November 29, 2017 (the “Credit Agreement”), among the Company, ~~refinanced its credit facilities pursuant to a new Credit Agreement (as amended, supplemented or otherwise modified, the “Credit Agreement”) among the Company,~~as borrower, the lenders party thereto, JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), as administrative agent and an issuing bank, ~~The~~ Bank of ~~Nova Scotia,~~America, N.A., as ~~revolving agent, swingline lender and~~ an issuing bank, and ~~the other parties thereto.~~Citibank, N.A., as an issuing bank. The Credit ~~Agreement provides for (a) a revolving credit facility (including swing line loans and letters~~Facilities consist of ~~credit)~~(1) $1,540,000 in ~~an initial~~ aggregate principal amount of ~~$250,000 that will mature on April 2, 2018~~senior secured tranche B term loans due in 2024 (the “Term Loan Facility”) and (2) a $150,000 senior secured revolving credit facility (which includes borrowing capacity available for letters of credit) due in 2022 (the “Revolving Facility”), (b) an initial term B-1 loan credit facility in an aggregate principal amount of $300,000 that matured 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,~~

On May 31, 2019, the Company ~~used the proceeds from borrowings~~made a voluntary prepayment at par of $50,000 in respect of its outstanding term loans under the Term ~~Facilities to pay off~~Loan Facility. As a ~~total~~result 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,this prepayment, the Company ~~had $2,400,000 debt outstanding under the Term Facilities and $248,848 of availability under the Revolving Facility. The Company incurred~~wrote off deferred financing fees of ~~$44,817 during~~$267 in the second quarter of fiscal ~~2013 in connection with this refinancing. In the second quarter~~2019.

As of ~~fiscal 2013,~~June 29, 2019, the Company ~~wrote-off fees associated~~had $1,374,500 of debt outstanding under the Credit Facilities, with ~~this refinancing which resulted~~$148,841 of availability and $1,159 in issued but undrawn letters of credit outstanding under the ~~Company recording a charge~~Revolving Credit Facility. There was no outstanding balance under the Revolving Credit Facility as of ~~$21,685 in early extinguishment~~June 29, 2019.

All obligations under the Credit Agreement are guaranteed by, subject to certain exceptions, each of ~~debt.~~

~~On September 26, 2014,~~the Company’s current and future wholly-owned material domestic restricted subsidiaries. All obligations under the Credit Agreement, and the guarantees of those obligations, are secured by substantially all of the assets of the Company and ~~certain lenders entered into an agreement amending the Credit Agreement that, among other things, eliminated the Financial Covenant (as defined in the Credit Agreement) with respect~~each guarantor, subject to the Revolving Facility. In connection with this amendment, the Company wrote-off deferred financing fees of approximately $1,583 in the third quarter of fiscal 2014. Concurrently with and in order to effect this amendment, the Company reduced the amount of the Revolving Facility from $250,000 to $50,000.customary exceptions, including:

Under the terms of the Credit Agreement, depending on the Company’s Consolidated First Lien Net Debt Leverage Ratio (as ~~defined~~used in the Credit Agreement), on an annual basis on or about the time the Company is required to deliver its financial statements for any fiscal year, the Company is obligated to offer to prepay a portion of the outstanding principal amount of the Term ~~Facilities~~Loan Facility in an aggregate amount determined by a percentage of its annual excess cash flow (as defined in the Credit Agreement) (said payment, a “Cash Flow Sweep”).

Borrowings under the Term Loan Facility bear interest at a rate per annum equal to, at the Company’s option, either (1) an applicable margin plus a base rate determined by reference to the highest of (a) 0.50% per annum plus the higher of (i) the Federal Funds Effective Rate and (ii) the Overnight Bank Funding Rate as determined by the Federal Reserve Bank of New York, (b) the prime rate of JPMorgan Chase and (c) the LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00%; provided that such rate is not lower than a floor of 1.75% or (2) an applicable margin plus a LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, provided that LIBOR is not lower than a floor of 0.75%. Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to an applicable margin based upon a leverage-based pricing grid, plus, at the Company’s option, either (1) a base rate determined by reference to the highest of (a) 0.50% per annum plus the higher of (i) the Federal Funds Effective Rate and (ii) the Overnight Bank Funding Rate as determined by the Federal Reserve Bank of New York, (b) the prime rate of JPMorgan Chase and (c) the LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00% or (2) a LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs. As of June 29, 2019, the applicable margins for the LIBOR rate borrowings under the Term Loan Facility and the Revolving Credit Facility were 4.75% and 2.25%, respectively.

On ~~March 13, 2015,~~a quarterly basis, the Company ~~commenced an offer~~pays a commitment fee to ~~prepay at a discount to par up to $75,000 in aggregate principal amount of term loans outstanding~~the lenders under the ~~Tranche B-1 Term Facility. On March 20, 2015, the Company accepted offers with a discount equal to or greater than 9.00%~~Revolving Credit Facility in respect of ~~such term loans. On March 25, 2015,~~unutilized commitments thereunder, which commitment fee fluctuates depending upon the ~~Company paid an aggregate amount of cash proceeds totaling $57,389 plus an amount sufficient to pay accrued and unpaid interest~~Company’s Consolidated First Lien Net Debt Leverage Ratio. Based on the ~~amount prepaid to prepay $63,065 in aggregate principal amount of such term loans under the Tranche B-1 Term Facility. This expenditure reduced, on a dollar for dollar basis, the~~ Company’s $59,728 obligation to make a mandatory excess cash flow prepayment offer to the term loan lenders under the terms of the Credit Agreement. In addition, the Company made a voluntary prepayment at par on March 25, 2015 of $2,500 in respect of such term loans under the Tranche B-1 Term Facility to reduce the remaining excess cash flow prepayment obligation for fiscal 2014. As a result of this prepayment, the Company wrote-off fees of $326, incurred fees of $601 and recorded a gain on early extinguishment of debt of $4,749, inclusive of these fees, in the first quarter of fiscal 2015.

On June 17, 2015, the Company commenced another offer to prepay at a discount to par up to $229,000 in aggregate principal amount of term loans outstanding under the Tranche B-1 Term Facility. On June 22, 2015, the Company accepted offers with a discount equal to or greater than 9.00% in respect of such term loans. On June 26, 2015, the Company paid an aggregate amount of cash proceeds totaling $77,225 plus an amount sufficient to pay accrued and unpaid interest on the amount prepaid to prepay $84,862 in aggregate principal amount of such term loans under the Tranche B-1 Term Facility. As a result of this prepayment, the Company wrote-off fees of $321, incurred fees of $641 and recorded a gain on early extinguishment of debt of $6,677, inclusive of these fees, in the second quarter of fiscal 2015.

On July 14, 2015, the Company drew down the $48,000 available on its Revolving Facility in order to enhance its cash position and to provide additional financial flexibility. As of January 2, 2016, the revolver borrowing was classified as a short-term liability in consideration of the fact that the terms of the Revolving Facility require an assessment as to whether there have been any material adverse changes with respect to the Company in connection with the Company’s monthly interest elections. Although the revolver borrowing was classified as a short-term liabilityConsolidated First Lien Net Debt Leverage Ratio as of ~~January 2, 2016, absent any change in fact~~June 29, 2019, the commitment fee was 0.35% per annum. The Company’s Consolidated First Lien Net Debt Leverage Ratio as of June 29, 2019 was 2.93:1.00.

The Credit Agreement contains other customary terms, including (1) representations, warranties and ~~circumstance, the Company had, and continues to have, the ability to extend and not repay the Revolving Facility until its due date of April 2, 2018.~~affirmative covenants, (2) negative covenants, including limitations on indebtedness, liens, mergers, acquisitions, asset sales, investments, distributions,

On April 1, 2016, the Company paid in full, with cash on hand, a principal amount of term loans equal to $144,323, which constituted the entire remaining principal amount of term loans outstanding under the Tranche B-1 Term Facility due April 2, 2016.

~~On July~~prepayments of subordinated debt, amendments of material agreements governing subordinated indebtedness, changes to lines of business and transactions with affiliates, in each case subject to baskets, thresholds and other exceptions, and (3) customary events of default.

The availability of certain baskets and the ability to enter into certain transactions are also subject to compliance with certain financial ratios. In addition, the Revolving Credit Facility includes a maintenance covenant that will require, in certain circumstances, compliance with certain first lien secured net leverage ratios.

As of June 29, ~~2016,~~2019, the Company ~~paid down,~~was in compliance with ~~cash~~all applicable financial covenants in the Credit Agreement governing the Credit Facilities.

The Notes were issued pursuant to an Indenture, dated as of November 29, 2017 (the “Indenture”), among the Company, the guarantors named therein and The Bank of New York Mellon, as trustee. The Indenture contains customary covenants, events of default and other provisions for an issuer of non-investment grade debt securities. These covenants include limitations on ~~hand,~~indebtedness, liens, mergers, acquisitions, asset sales, investments, distributions, prepayments of subordinated debt and transactions with affiliates, in each case subject to baskets, thresholds and other exceptions.

~~On May 18, 2017,~~the Notes with an amount not to exceed the net proceeds of certain equity offerings at 108.625% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the redemption date. Prior to December 1, 2020, the Company ~~commenced another~~may redeem some or all of the Notes at a make-whole price plus accrued and unpaid interest, if any, to, but not including, the redemption date. If a change of control occurs, the Company must offer to ~~prepay~~purchase for cash the Notes at a ~~discount~~purchase price equal to ~~par up~~101% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, ~~$75,000~~but not including, the purchase date. Following the sale of certain assets and subject to certain conditions, the Company must offer to purchase for cash the Notes at a purchase price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, but not including, the purchase date. The Notes are guaranteed on a senior unsecured basis by the Company’s subsidiaries that guarantee the Credit Facilities.

At June 29, 2019, the Company had $1,674,500 outstanding under the Credit Facilities and the Notes, consisting of the Term Loan Facility of $1,374,500, $0 drawn down on the Revolving Credit Facility and $300,000 in aggregate principal amount of ~~term loans outstanding under the Tranche B-2 Term Facility.~~ ~~On May 24, 2017, the Company accepted offers with a discount equal to or greater than 3.28% in respect of such term loans. On May 25, 2017,~~ ~~the Company paid an aggregate amount of cash proceeds totaling~~ ~~$73,030 plus an amount sufficient to pay accrued~~Notes issued and ~~unpaid interest on the amount prepaid to prepay $75,507 in aggregate principal amount of such term loans under the Tranche B-2 Term Facility~~. As a result of this prepayment, the Company wrote-off fees of $618, incurred fees of $305 and recorded a gain on early extinguishment of debt of $1,554, inclusive of these fees, in the second quarter of fiscal 2017.outstanding.

At September 30, 2017 under the WWI Credit Facility, the Company had $1,930,386 outstanding consisting entirely of a term loan under the Tranche B-2 Term Facility. At September 30, 2017, the Revolving Facility had $0 outstanding, $2,165 in issued but undrawn letters of credit outstanding thereunder and $47,835 in available unused commitments thereunder. The proceeds from borrowings under the Revolving Facility (including swing line loans and letters of credit) are available to be used for working capital and general corporate purposes.

~~At September 30, 2017, i~~n accordance with the terms of the Credit Agreement, it is probable that the Company will have a Cash Flow Sweep obligation of approximately $11,216 to the term loan lenders in the second quarter of fiscal 2018.

Borrowings under the 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. 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%. Under the terms of the Credit Agreement, in the event the Company receives a corporate rating of BB- (or lower) from S&P and a corporate rating of Ba3 (or lower) from Moody’s, the applicable margin relating to the Term Facilities would increase by 25 basis points. On February 21, 2014, both S&P and Moody’s issued revised corporate ratings of the Company of B+ and B1, respectively. As a result, effective February 21, 2014, the applicable margin on borrowings under the Tranche B-1 Term Facility went from 2.75% to 3.00% and on borrowings under the Tranche B-2 Term Facility went from 3.00% to 3.25%. The applicable margin relating to the Revolving Facility will fluctuate depending upon the Company’s Consolidated Leverage Ratio. At April 1, 2016, the date of payment of the principal amount of loans outstanding under the Tranche B-1 Term Facility discussed above, borrowings under the Tranche B-1 Term Facility bore interest at LIBOR plus an applicable margin of 3.00%. At September 30, 2017, borrowings under the Tranche B-2 Term Facility bore interest at LIBOR plus an applicable margin of 3.25%. Based on the Company’s Consolidated Leverage Ratio as of September 30, 2017, had there been any borrowings under the Revolving Facility, it would have borne interest at LIBOR plus an applicable margin of 2.50%. On a quarterly basis, the Company will pay a commitment fee to the lenders under the Revolving Facility in respect of unutilized commitments thereunder, which commitment fee will fluctuate depending upon the Company’s Consolidated Leverage Ratio. Based on the Company’s Consolidated Leverage Ratio as of September 30, 2017June 29, 2019 and December 31, 2016, the commitment fee was 0.50% per annum. For the nine months ended September 30, 2017 and the fiscal year ended December 31, 2016, the Company paid $183 and $31, respectively, in commitment fees. The Company also will pay customary letter of credit fees and fronting fees under the Revolving Facility, which totaled $36 for the nine months ended September 30, 2017 and $49 for the fiscal year ended December 31, 2016.

The Credit 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 Facility does not require the Company to meet any financial maintenance covenants and is guaranteed by certain of the Company’s existing and future subsidiaries. Substantially all of the Company’s assets secure the WWI Credit Facility.

~~At September 30, 2017 and December 31, 2016,~~29, 2018, the Company’s debt consisted ~~entirely~~ of both fixed and variable-rate instruments. ~~An interest~~Interest rate ~~swap was~~swaps were entered into to hedge a portion of the cash flow exposure associated with the Company’s variable-rate borrowings. See Note 12 for information on the Company’s interest rate swaps. The weighted average interest rate (which includes amortization of deferred financing ~~costs)~~costs and debt discount) on the Company’s outstanding debt, exclusive of the impact of the swap in effect, was approximately ~~4.68%~~8.17% and ~~4.41%~~7.73% per annum based on interest rates at ~~September 30, 2017~~June 29, 2019 and December ~~31, 2016,~~29, 2018, respectively. The weighted average interest rate (which includes amortization of deferred financing ~~costs)~~costs and debt discount) on the Company’s outstanding debt, including the impact of the swap in effect, was approximately ~~5.19%~~7.61% and ~~5.32%~~7.46% per annum based on interest rates at ~~September 30, 2017~~June 29, 2019 and December ~~31, 2016,~~29, 2018, respectively.

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:~~earnings per share:

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30,		October 1,		September 30,		October 1,		June 29,		June 30,		June 29,		June 30,
	2017		2016		2017		2016		2019		2018		2019		2018
Numerator:
Net income attributable to
Weight Watchers International, Inc.	$	44,719	$	34,658	$	100,544	$	54,400	$	53,834	$	70,720	$	43,148	$	109,832
Denominator:
Weighted average shares of common stock outstanding		64,463		63,782		64,237		63,690		67,124		66,400		67,044		65,761
Effect of dilutive common stock equivalents		4,223		2,059		3,702		2,182		2,017		3,754		2,224		4,153
Weighted average diluted common shares outstanding		68,686		65,841		67,939		65,872		69,141		70,154		69,268		69,914
Earnings per share attributable to Weight Watchers International, Inc.
Basic	$	0.69	$	0.54	$	1.57	$	0.85	$	0.80	$	1.07	$	0.64	$	1.67
Diluted	$	0.65	$	0.53	$	1.48	$	0.83	$	0.78	$	1.01	$	0.62	$	1.57

The number of anti-dilutive common stock equivalents excluded from the calculation of the weighted average number of common shares for diluted EPS was ~~1,862~~2,032 and ~~1,921~~32 for the three months ended ~~September~~June 29, 2019 and June 30, ~~2017~~2018, respectively. The number of anti-dilutive common stock equivalents excluded from the calculation of the weighted average number of common shares for diluted EPS was 1,975 and ~~October 1, 2016, respectively, and 1,230 and 1,448~~399 for the ~~nine~~six months ended ~~September~~June 29, 2019 and June 30, ~~2017 and October 1, 2016,~~2018, respectively.

On May 6, 2008 and May 12, 2004, respectively, the Company’s shareholders approved the 2008 Stock Incentive Plan (the “2008 Plan”) and the 2004 Stock Incentive Plan (the “2004 Plan”). On May 6, 2014, the Company’s shareholders approved the 2014 Stock Incentive Plan (as amended and restated, the “2014 Plan”, and together with the 2004 Plan and the 2008 Plan, the “Stock Plans”), which replaced the 2008 Plan and 2004 Plan for all equity-based awards granted on or after May 6, 2014. The 2014 Plan is 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 long-term equity incentive compensation program has historically included time-vesting non-qualified stock option and/or restricted stock unit (including performance-based stock unit with both time- and performance-vesting criteria (“PSUs”)) awards. The Company’s Board of Directors or a committee thereof administers the 2014 Plan.

~~Pursuant to~~In fiscal 2019, the restricted stock provisions of the 2014 Plan, in fiscal 2016 the Compensation and Benefits Committee of the Company’s Board of Directors (the “Compensation Committee”) determined to grant 289.9 performance-based stock unit (“PSU”) awardsCompany granted 275.8 PSUs having both time- and performance-vesting criteria. The time-vesting criteria for these PSUs will be satisfied upon continued employment (with limited exceptions) on the third anniversary of the grant ~~date (i.e., May 16, 2019).~~date. The performance-vesting criteria for these PSUs will be satisfied if the Company has achieved a ~~Debt Ratio (as defined in the applicable term sheet~~certain annual operating income objective for ~~these PSU awards and based on a Debt to EBITDAS ratio (each, as defined therein)) at levels at or above a “threshold” level performance of 4.5x over~~ the performance period ~~from December 31, 2017 to December 29, 2018.~~of fiscal 2021. Pursuant to these awards, the number of PSUs that become vested, if any, upon the satisfaction of both vesting criteria, shall be equal to (x) the target number of PSUs granted multiplied by (y) the applicable ~~Debt Ratio~~ achievement percentage, rounded down to avoid the issuance of fractional shares. If all of these awards fully meet the time-vesting criteria and the minimum performance condition is attained, depending on the Company’s Debt Ratio achievement, the number of shares of the Company’s common stock issuable under these PSUs range from 61.7 to 308.4. The Company is currently accruing compensation expense to what it believes is the probable outcome upon vesting.

14In fiscal 2018, the Company granted 81.3 PSUs having both time- and performance-vesting criteria. The time-vesting criteria for these PSUs will be satisfied upon continued employment (with limited exceptions) on the third anniversary of the grant date. The performance-vesting criteria for these PSUs will be satisfied if the Company has achieved a certain annual operating income objective for the performance period of fiscal 2020. Pursuant to these awards, the number of PSUs that become vested, if any, upon the satisfaction of both vesting criteria, shall be equal to (x) the target number of PSUs granted multiplied by (y) the applicable achievement percentage, rounded down to avoid the issuance of fractional shares. The applicable achievement percentage shall increase in the event the Company has achieved a certain revenue target during such performance period. The Company is currently accruing compensation expense to what it believes is the probable outcome upon vesting.

~~Additionally, pursuant to the restricted stock provisions of the 2014 Plan, in~~In fiscal 2017, the ~~Compensation Committee determined to grant~~Company granted 98.5 PSUs in May 2017 and 47.9 PSUs in July 2017, all having both time- and performance-vesting criteria. The time-vesting criteria for these PSUs will be satisfied upon continued employment (with limited exceptions) on May 15, 2020. The performance-vesting criteria for these PSUs will be satisfied if the Company has achieved, in the case of the May 2017 awards, certain annual operating income objectives and, in the case of the July 2017 award, certain net income or operating income objectives, as applicable, for each performance year, in each fiscal year over a three-year period (i.e., fiscal 2017 through fiscal 2019) (each, a “2017 Award Performance Year”). When the performance measure has been met for a particular 2017 Award Performance Year, that portion of units is “banked” for potential issuance following the satisfaction of the ~~three-year~~ time-vesting criteria. Such portion of units to be “banked” shall be equal to (x) the target number of PSUs granted for the applicable 2017 Award Performance Year multiplied by (y) the applicable achievement percentage, rounded down to avoid the issuance of fractional shares. If all of these awards fully meet the time-vesting criteria and the minimum performance condition is attained in each 2017 Award Performance Year, depending on the Company’s performance achievement, the number of shares of the Company’s common stock issuable under these PSUs range from 48.8 to 244.0. The Company is currently accruing compensation expense to what it believes is the probable outcome upon vesting.

In fiscal 2016, the Company granted 289.9 PSUs having both time- and performance-vesting criteria. The time-vesting criteria for these PSUs was satisfied upon continued employment (with limited exceptions) on the third anniversary of the grant date (i.e., May 16, 2019). The performance-vesting criteria for these PSUs was satisfied when the Company achieved a Debt Ratio (as defined in the applicable term sheet for these PSU awards and based on a Debt to EBITDAS ratio (each, as defined therein)) at levels at or below 4.5x over the performance period from December 31, 2017 to December 29, 2018. Pursuant to these awards, the number of PSUs that became vested upon the satisfaction of the time-vesting criteria of 219.3 was calculated as (x) the target number of PSUs granted multiplied by (y) 166.67%, the applicable Debt Ratio achievement percentage, rounded down to avoid the issuance of fractional shares. The Company accrued compensation expense in an amount equal to the outcome upon vesting.

The effective tax rates for the three and ~~nine~~six months ended ~~September 30, 2017~~June 29, 2019 were ~~30.5%~~23.6% and ~~26.6%~~24.2%, respectively. The effective tax rates for the three and ~~nine~~six months ended ~~October 1, 2016~~June 30, 2018 were ~~10.3%~~21.9% and ~~18.6%~~6.2%, respectively.

For the ~~nine~~six months ended ~~September 30, 2017,~~June 29, 2019, the primary difference between the USU.S. federal statutory tax rate and the Company’s consolidated effective tax rate was due to $1,798 of tax expense related to global intangible low-taxed income (“GILTI”) and $1,766 of higher state income tax expenses versus the prior year period. The effective tax rate was partially offset by a $1,375 tax benefit related to the reversal of tax reserves no longer needed, a $1,284 tax benefit related to foreign-derived intangible income (“FDII”) and a $746 tax benefit related to the cessation of certain publishing operations. For the six months ended June 30, 2018, the primary difference between the U.S. federal statutory tax rate and the Company’s consolidated effective tax rate was due to the ~~$11,633~~$22,155 tax benefit related to tax windfalls from stock compensation and a $1,859 tax benefit related to the cessation of operations of the Company’s ~~Spanish subsidiary recorded in the first quarter of fiscal 2017 and a $2,255 reversal of tax reserves resulting from an updated transfer pricing study.~~Mexican subsidiary.

~~For the three months and nine months ended October 1, 2016 the primary~~The differences between the USU.S. federal statutory tax rate and the Company’s consolidated effective tax rate were due to $11,438 net tax benefits arising from a research and development tax credit and a Section 199 deduction for the tax years 2012 through 2016, partially offset by $2,684 of income tax expenses recorded for out-of-period adjustments. See Note 1 for additional information on these adjustments. For the nine months ended October 1, 2016, the difference between the US federal statutory tax rate and the Company’s consolidated effective tax rate was also due to the reversal of a $2,500 valuation allowance related to tax benefits for foreign losses that are now expected to be realized.

~~The differences between the US federal statutory tax rate and the Company’s consolidated effective tax rate is~~ as follows:

Three Months Ended

Nine Months Ended

September 30,

October 1,

September 30,

October 1,

2017

2016

2017

2016

US federal statutory tax rate

35.0
%

35.0
%

35.0
%

35.0
%
State income taxes (net of federal benefit)

0.5
%

0.0
%

1.5
%

0.0
%
Cessation of Spanish operations

0.0
%

0.0
%

(8.5
%)

0.0
%
Research and development credit

(2.1
%)

(39.6
%)

(2.2
%)

(24.0
%)
Tax (windfall) shortfall on share-based
awards

(0.9
%)

0.0
%

0.0
%

0.0
%
Reserves for uncertain tax positions

(4.5
%)

7.4
%

(1.7
%)

5.2
%
Out-of-period adjustments

0.0
%

7.0
%

0.0
%

4.0
%
Increase (decrease) in valuation allowance

1.1
%

0.0
%

3.0
%

(3.8
%)
Other

1.4
%

0.5
%

(0.5
%)

2.2
%
Effective Tax Rate

30.5
%

10.3
%

26.6
%

18.6
%

	Three Months Ended						Six Months Ended
	June 29,			June 30,			June 29,			June 30,
	2019			2018			2019			2018
U.S. federal statutory tax rate		21.0	%		21.0	%		21.0	%		21.0	%
State income taxes (net of federal benefit)		0.4	%		2.2	%		3.1	%		2.3	%
Reserves for uncertain tax positions		(2.0	%)		0.3	%		(2.4	%)		0.2	%
Cessation of operations		(1.1	%)		0.0	%		(1.3	%)		(1.6	%)
Research and development credit		(0.4	%)		(0.1	%)		(1.1	%)		(0.4	%)
Tax windfall on share-based awards		0.1	%		(4.5	%)		0.2	%		(18.9	%)
GILTI		1.3	%		2.9	%		3.2	%		4.5	%
FDII		(0.9	%)		(1.2	%)		(2.3	%)		(1.9	%)
Impact of foreign operations		2.2	%		0.6	%		1.8	%		(0.4	%)
Other		2.8	%		0.7	%		2.0	%		1.4	%
Total effective tax rate		23.6	%		21.9	%		24.2	%		6.2	%

In March 2019, two substantially identical class action complaints alleging violations of the federal securities laws were filed by individual shareholders against the Company, certain of the Company’s current officers and the Company’s former controlling

~~On January 7, 2016, an OnlinePlus~~ ~~member filed a putative class action complaint against the Company~~shareholder, Artal Group S.A. (“Artal”), in ~~the Supreme Court of New York, New York County, asserting class claims for breach of contract and violations of the New York General Business Law. On February 5, 2016, the Company removed the case to~~ the United States District Court for the Southern District of New York. The actions were consolidated and lead plaintiffs were appointed in June 2019. A consolidated amended complaint was filed on July 29, 2019, naming as defendants the Company, certain of the Company’s current officers and directors, and Artal and certain of its affiliates. The consolidated complaint asserts claims on behalf of all purchasers of the Company’s common stock between May 4, 2018 and February 26, 2019, inclusive (the “Class Period”), including purchasers of the Company’s common stock traceable to the May 2018 secondary offering of the Company’s common stock by certain of its shareholders. The complaint alleges that, during the Class Period, the defendants disseminated materially false and misleading statements and/or concealed or recklessly disregarded material adverse facts. The complaint alleges claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder, and with respect to the secondary offering, under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended. The plaintiffs seek to recover unspecified damages on behalf of the class members. The Company believes that the action is without merit and intends to vigorously defend it.

On March ~~18, 2016,~~26, 2019, June 4, 2019, July 22, 2019, and July 26, 2019, the ~~plaintiff~~Company received shareholder litigation demands alleging breaches of fiduciary duties by certain current and former Company directors and executive officers, to the alleged injury of the Company. On June 13, 2019, a separate shareholder derivative complaint was filed ~~an amended complaint,~~in the Southern District of New York against the Company’s Board of Directors alleging that ~~as a result~~the directors breached fiduciary duties to the alleged injury of the ~~temporary glitches in the Company’s website and app in November and December 2015, the Company has: (1) breached its Subscription Agreement with its OnlinePlus~~ ~~members; and (2) engaged in deceptive acts and practices in violation of Section 350 of the New York General Business Law.~~Company. The plaintiff ~~is seeking unspecified actual, punitive and statutory damages, as well as his attorneys’ fees and costs incurred in connection with this action. The Company filed a motion to dismiss~~voluntarily dismissed the complaint on ~~May 6, 2016. The plaintiff filed his opposition papers on June 9, 2016~~July 8, 2019 and the Company agreed to treat the complaint as a litigation demand. On July 23, 2019, another separate shareholder derivative complaint was filed ~~its reply papers on June 23, 2016. The Court granted~~in the ~~Company’s motion~~Southern District of New York against the Board of Directors alleging, among other things, that the directors breached fiduciary duties to ~~dismiss on November 14, 2016. On November 16, 2016,~~ the ~~plaintiff filed a timely notice of appeal~~alleged injury of the ~~Court’s decision~~Company. The plaintiff voluntarily dismissed the complaint the same day. The allegations in the demands relate to those contained in the ongoing securities class action litigation. In response to the ~~Second Circuit Court~~demands, pursuant to Virginia law, the Board of ~~Appeals~~Directors has created a special committee to investigate and ~~on January 31, 2017,~~evaluate the ~~plaintiff filed his brief~~claims made in ~~support of appeal. The Company filed its opposition brief on April 5, 2017, and~~ the plaintiff filed his reply brief on April 25, 2017. On October 25, 2017, the Second Circuit conducted oral arguments on the plaintiff’s appeal. On November 2, 2017, the Second Circuit issued its decision denying the plaintiff’s appeal and affirming the lower court’s dismissal of the case. The plaintiff has until November 16, 2017 to file a petition for a rehearing with the Second Circuit, or until January 31, 2018 to file a petition for appeal with the United States Supreme Court.demands.

Due to the nature of the Company’s activities, it is also, at times, subject to other pending and threatened legal actions, including patent and other intellectual property actions, that arise out of the ordinary course of business. In the opinion of management, the disposition of any such matters is not expected, individually or in the aggregate, to have a material adverse 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 resolution of one or more legal actions.

As of ~~September 30, 2017~~June 29, 2019 and December ~~31, 2016,~~29, 2018, the Company had in effect an interest rate swap with a notional amount totaling $1,000,000 and $1,250,000, ~~and $1,500,000,~~ respectively.

On July 26, 2013, in order to hedge a portion of its variable rate debt, the Company entered into a forward-starting interest rate swap with an effective date of March 31, 2014 and a termination date of April 2, 2020. The initial notional amount of this swap was $1,500,000. During the term of this swap, the notional amount decreased from $1,500,000 effective March 31, 2014 to $1,250,000 on April 3, 2017 and ~~will decrease to~~ $1,000,000 on April 1, 2019. This interest rate swap effectively fixes the variable interest rate on the notional amount of this swap at ~~2.38%~~2.41%. This swap qualifies for hedge accounting and, therefore, changes in the fair value of this swap have been recorded in accumulated other comprehensive loss.

On June 11, 2018, in order to hedge a portion of its variable rate debt, the Company entered into a forward-starting interest rate swap (the “2018 swap”) with an effective date of April 2, 2020 and a termination date of March 31, 2024. The initial notional amount of this swap is $500,000. During the term of this swap, the notional amount will decrease from $500,000 effective April 2, 2020 to $250,000 on March 31, 2021. This interest rate swap effectively fixes the variable interest rate on the notional amount of this swap at 3.1005%. On June 7, 2019, in order to hedge a portion of its variable rate debt, the Company entered into a forward-starting interest rate swap (together with the 2018 swap, the “future swaps”) with an effective date of April 2, 2020 and a termination date of March 31, 2024. The notional amount of this swap is $250,000. This interest rate swap effectively fixes the variable interest rate on the notional amount of this swap at 1.901%. The future swaps qualify for hedge accounting and, therefore, changes in the fair value of the future swaps have been recorded in accumulated other comprehensive loss.

As of ~~September 30, 2017~~June 29, 2019 and December ~~31, 2016,~~29, 2018, cumulative unrealized losses for qualifying hedges were reported as a component of accumulated other comprehensive loss in the amounts of ~~$10,828~~$14,744 ($~~17,751~~19,814 before taxes) and ~~$16,002~~$1,175 ($~~26,232~~1,634 before taxes), respectively.As of June 29, 2019, the fair value of the Company’s then-effective swap was a liability of $2,068, which is included in derivative payable in the consolidated balance sheet. As of June 29, 2019, the fair value of the Company’s future swaps was a liability of $17,262, which is included in derivative payable in the consolidated balance sheet. As of December 29, 2018, the fair value of the Company’s then-effective swap included a current asset of $3,526 and a noncurrent asset of $398, which are included in other current assets and other noncurrent assets, respectively, in the consolidated balance sheet. As of December 29, 2018, the fair value of the Company’s 2018 swap was a liability of $5,578, which is included in derivative payable in the consolidated balance sheet.

The Company is hedging forecasted transactions for periods not exceeding the next ~~three~~five years. The Company expects approximately ~~$5,183~~$2,116 ($~~8,497~~2,836 before taxes) of derivative losses included in accumulated other comprehensive loss at ~~September 30, 2017,~~June 29, 2019, based on current market rates, will be reclassified into earnings within the next 12 months.

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

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

The Company’s significant financial instruments include long-term debt and an interest rate swap ~~agreement~~agreements as of ~~September 30, 2017~~June 29, 2019 and December ~~31, 2016.~~29, 2018. The fair value of the Company’s borrowings under the Revolving Credit Facility approximated a carrying value of $0 at June 29, 2019 and December 29, 2018, respectively.

The fair value of the Company’s ~~Term~~Credit Facilities is determined by utilizing average bid prices on or near the end of each fiscal quarter (Level 2 input). As of ~~September 30, 2017~~June 29, 2019 and December ~~31, 2016,~~29, 2018, the fair value of the Company’s long-term debt was approximately ~~$1,897,108~~$1,595,373 and ~~$1,671,920,~~$1,757,717, respectively, as compared to the carrying value (net of ~~deferring~~deferred financing ~~costs)~~costs and debt discount) of ~~$1,916,271~~$1,642,210 and ~~$2,002,299,~~$1,746,708, respectively.

The fair values for the Company’s derivative financial instruments are determined using observable current market information such as the prevailing LIBOR interest rate and LIBOR yield curve rates and include consideration of counterparty credit risk. See Note 12 for disclosures related to derivative financial instruments.

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

The Company did not have any transfers into or out of Levels 1 and 2 and did not maintain any assets or liabilities classified as Level 3, during the ~~nine~~six months ended ~~September 30, 2017~~June 29, 2019 and the fiscal year ended December ~~31, 2016.~~

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

Nine Months Ended September 30, 2017

Loss on
Qualifying
Hedges

Loss on
Foreign
Currency
Translation

Total

Beginning Balance at December 31, 2016

$
(16,002
)

$
(11,118
)

$
(27,120
)
Other comprehensive (loss) income before
   reclassifications, net of tax

(2,498
)

6,358

3,860

Amounts reclassified from accumulated other
   comprehensive loss, net of tax^(b)

7,672

787

8,459

Net current period other comprehensive income including
   noncontrolling interest

5,174

7,145

12,319

Less: net current period other comprehensive income
   attributable to the noncontrolling interest

0

(72
)

(72
)
Ending Balance at September 30, 2017

$
(10,828
)

$
(4,045
)

$
(14,873
)

	Six Months Ended June 29, 2019
	Loss on Qualifying Hedges			Loss on Foreign Currency Translation			Total
Beginning Balance at December 29, 2018	$	(1,175	)	$	(14,582	)	$	(15,757	)
Other comprehensive (loss) income before reclassifications, net of tax		(12,255	)		2,623			(9,632	)
Amounts reclassified from accumulated other comprehensive loss, net of tax^(b)		(1,314	)		0			(1,314	)
Net current period other comprehensive (loss) income including noncontrolling interest		(13,569	)		2,623			(10,946	)
Less: net current period other comprehensive loss attributable to the noncontrolling interest		0			(6	)		(6	)
Ending Balance at June 29, 2019	$	(14,744	)	$	(11,965	)	$	(26,709	)

Nine Months Ended October 1, 2016

Loss on
Qualifying
Hedges

Loss on
Foreign
Currency
Translation

Total

Beginning Balance at January 2, 2016

$
(23,135
)

$
(14,130
)

$
(37,265
)
Other comprehensive (loss) income before
   reclassifications, net of tax

(17,440
)

6,232

(11,208
)
Amounts reclassified from accumulated other
   comprehensive loss, net of tax^(b)

11,319

0

11,319

Net current period other comprehensive (loss) income
   including noncontrolling interest

(6,121
)

6,232

111

Less: net current period other comprehensive income
   attributable to the noncontrolling interest

0

(450
)

(450
)
Ending Balance at October 1, 2016

$
(29,256
)

$
(8,348
)

$
(37,604
)

	Six Months Ended June 30, 2018
	(Loss) Gain on Qualifying Hedges			Loss on Foreign Currency Translation			Total
Beginning Balance at December 30, 2017	$	(5,392	)	$	(5,075	)	$	(10,467	)
Other comprehensive income (loss) before reclassifications, net of tax		7,236			(5,396	)		1,840
Amounts reclassified from accumulated other comprehensive loss, net of tax(b)		1,942		0				1,942
Adoption of accounting standard		(1,161	)		(1,324	)		(2,485	)
Net current period other comprehensive income (loss) including noncontrolling interest		8,017			(6,720	)		1,297
Less: net current period other comprehensive loss attributable to the noncontrolling interest	0				373			373
Ending Balance at June 30, 2018	$	2,625		$	(11,422	)	$	(8,797	)

	Three Months Ended						Nine Months Ended							Three Months Ended						Six Months Ended
	September 30,			October 1,			September 30,			October 1,				June 29,			June 30,			June 29,			June 30,
	2017			2016			2017			2016				2019			2018			2019			2018
Details about Other Comprehensive Loss Components	Amounts Reclassified from Accumulated Other Comprehensive Loss						Amounts Reclassified from Accumulated Other Comprehensive Loss						Affected Line Item in the Statement Where Net Income is Presented	Amounts Reclassified from Accumulated Other Comprehensive Loss						Amounts Reclassified from Accumulated Other Comprehensive Loss						Affected Line Item in the Statement Where Net Income is Presented
Loss on Qualifying Hedges
Interest rate contracts	$	(3,422	)	$	(6,185	)	$	(12,577	)	$	(18,555	)	Interest expense	$	498		$	(346	)	$	1,760		$	(2,603	)	Interest expense
		(3,422	)		(6,185	)		(12,577	)		(18,555	)	Income before income taxes		498			(346	)		1,760			(2,603	)	Income before income taxes
		1,335			2,412			4,905			7,236		Provision for income taxes		(126	)		88			(446	)		661		Provision for income taxes
	$	(2,087	)	$	(3,773	)	$	(7,672	)	$	(11,319	)	Net income	$	372		$	(258	)	$	1,314		$	(1,942	)	Net income
Loss on Foreign Currency Translation	$	0		$	0		$	(787	)	$	0		Other expense (income), net
		0			0			(787	)		0		Income before income taxes
		0			0			0			0		Provision for income taxes
	$	0		$	0		$	(787	)	$	0	��	Net income

The Company has four reportable segments based on an integrated geographical structure as follows: North America, ~~United Kingdom,~~ Continental Europe (CE), United Kingdom, and Other. Other consists of Australia, New Zealand and emerging markets operations and franchise revenues and related costs, all of which have been grouped together as if they were a single reportable segment because they do not meet any of the quantitative thresholds and are immaterial for separate disclosure. To be consistent with the information that is presented to the chief operating decision maker, the Company does not include intercompany activity in the segment results. Information about the Company’s reportable segments is as follows:

	Total Revenue								Total Revenue, net				Total Revenue, net
	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30, 2017		October 1, 2016		September 30, 2017		October 1, 2016		June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018
North America	$	223,677	$	192,899	$	695,397	$	613,287	$	255,644	$	284,538	$	505,656	$	563,715
Continental Europe										77,329		81,592		153,486		164,123
United Kingdom		25,473		23,480		75,907		80,093		24,525		29,210		49,136		59,495
Continental Europe		60,665		50,675		179,580		163,429
Other		13,872		13,765		43,538		40,681		11,525		14,407		23,910		30,637
Total revenue	$	323,687	$	280,819	$	994,422	$	897,490
Total revenue, net									$	369,023	$	409,747	$	732,188	$	817,970

	Net Income				Net Income
	Three Months Ended				Six Months Ended
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018
Segment operating income:
North America	$	91,169	$	112,040	$	132,282	$	174,393
Continental Europe		30,764		32,478		40,839		50,409
United Kingdom		4,308		6,035		3,557		9,903
Other		1,726		3,452		1,396		5,037
Total segment operating income		127,967		154,005		178,074		239,742
General corporate expenses		22,494		26,297		50,703		49,963
Interest expense		34,732		35,866		69,927		71,732
Other expense, net		438		1,333		741		1,097
Provision for income taxes		16,586		19,825		13,711		7,208
Net income	$	53,717	$	70,684	$	42,992	$	109,742
Net loss attributable to the noncontrolling interest		117		36		156		90
Net income attributable to Weight Watchers International, Inc.	$	53,834	$	70,720	$	43,148	$	109,832

Net Income

Three Months Ended

Nine Months Ended

September 30, 2017

October 1, 2016

September 30, 2017

October 1, 2016

Segment operating income:

North America

$
76,206

$
50,614

$
189,397

$
133,113

United Kingdom

5,968

4,864

15,213

10,780

Continental Europe

27,097

18,872

54,920

39,602

Other

1,473

2,998

6,413

6,111

Total segment operating income

110,744

77,348

265,943

189,606

General corporate expenses

19,366

10,556

48,126

35,525

Interest expense

26,993

28,329

82,227

86,963

Other expense (income), net

125

(146
)

278

397

Gain on early extinguishment of debt

0

0

(1,554
)

0

Provision for income taxes

19,593

3,989

36,457

12,420

Net income

44,667

34,620

100,409

54,301

Net loss attributable to the noncontrolling interest

52

38

135

99

Net income attributable to Weight Watchers
International, Inc.

$
44,719

$
34,658

$
100,544

$
54,400

	Depreciation and Amortization				Depreciation and Amortization
	Three Months Ended				Six Months Ended
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018
North America	$	9,081	$	9,163	$	18,386	$	18,642
Continental Europe		395		317		776		618
United Kingdom		139		350		425		715
Other		107		164		218		309
Total segment depreciation and amortization		9,722		9,994		19,805		20,284
General corporate depreciation and amortization		4,037		2,834		7,568		5,612
Depreciation and amortization	$	13,759	$	12,828	$	27,373	$	25,896

Due to the adoption of the updated lease accounting guidance the Company has a right of use operating lease asset of $144,913 as of June 29, 2019, of which 52% is in the North America reportable segment and 42% is general corporate related.

As ~~more fully described in Note 4,~~previously disclosed, on October 18, 2015, the Company entered into the Strategic Collaboration Agreement with ~~Ms.~~Oprah Winfrey, under which she will consult with the Company and participate in developing, planning, executing and enhancing the ~~Weight Watchers~~WW program and related initiatives, and provide it with services in her discretion to promote the Company and its programs, products and services.

In addition to the Strategic Collaboration Agreement, Ms. Winfrey and her related entities provided services to the Company totaling ~~$364~~$720 and ~~$2,920~~$2,003 for the three and ~~nine~~six months ended ~~September 30, 2017,~~June 29, 2019, respectively, and ~~$368~~$689 and ~~$2,054~~$1,988 for the three and ~~nine~~six months ended ~~October 1, 2016,~~June 30, 2018, respectively, which services included advertising, production and related fees.

The Company’s accounts payable to parties related to Ms. Winfrey at ~~September 30, 2017~~June 29, 2019 and December ~~31, 2016~~29, 2018 was ~~$364~~$0 and ~~$1,123,~~$62, respectively.

In March 2018, as permitted by the transfer provisions set forth in the previously disclosed Share Purchase Agreement, dated October 18, 2015, between the Company and Ms. Winfrey, and the Option Agreement, dated October 18, 2015, between the Company and Ms. Winfrey, Ms. Winfrey sold 954 of the shares she purchased under such purchase agreement and exercised a portion of her stock options resulting in the sale of 1,405 shares issuable under such options, respectively.

As previously disclosed, the Company undertook an organizational realignment which resulted in the elimination of certain positions and termination of employment for certain employees worldwide in the six months ended June 29, 2019. The Company recorded expenses in connection with employee termination benefit costs of $6,331 ($4,727 after tax) during the six months ended June 29, 2019. These expenses impacted cost of revenues by $1,425 and selling, general and administrative expense by $4,906 in the six months ended June 29, 2019. The Company recorded all expenses in the first quarter of 2019 and does not anticipate recording additional expenses in connection with this organizational realignment. All expenses were recorded to general corporate expenses and therefore there was no impact to the segments.

For the six months ended June 29, 2019, the Company made payments of $3,882 towards the liability for these expenses and lowered provision estimates by $91. The Company expects the remaining liability of $2,358 to be paid in full in fiscal 2019.

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

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

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,” the “Company” and ~~“WWI”~~“WW” refer to Weight Watchers International, Inc. and all of its operations consolidated for purposes of its financial statements; “North America” refers to our North American Company-owned operations; “Continental Europe” refers to our Continental Europe Company-owned operations; “United Kingdom” refers to our United Kingdom ~~Company-owned operations; “Continental Europe” refers to our Continental Europe~~ Company-owned operations; and “Other” refers to Australia, New Zealand and emerging markets operations and franchise revenues and related costs. Each of North America, Continental Europe, United Kingdom ~~Continental Europe~~ and Other is also a reportable segment. Our ~~“meetings”~~“Digital” business refers to providing subscriptions to our digital product offerings, including the Personal Coaching + Digital product. Our “Studio + Digital” business refers to providing access to our weekly in-person workshops combined ~~meetings and~~with our digital subscription product offerings to ~~the Company’s~~ commitment plan ~~subscribers (including Total Access subscribers), as well as~~subscribers. Our “Studio + Digital” business also includes the provision of access to ~~meetings~~workshops for members who do not subscribe to commitment plans, including our “pay-as-you-go” ~~members and other meetings~~ members. ~~“Online” refers to Weight Watchers Online, Weight Watchers OnlinePlus, Personal Coaching and other digital subscription products.~~

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

The following ~~term~~terms used in this Quarterly Report on Form 10-Q isare our ~~trademark:~~ trademarks: Weight Watchers^®and WW Freestyle^TM.

You should read the following discussion in conjunction with our Annual Report on Form 10-K for fiscal ~~2016~~2018 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 referred to as the “Consolidated Financial Statements”).

To supplement our consolidated results presented in accordance with accounting principles generally accepted in the United States, or GAAP, we have disclosed non-GAAP financial measures of operating results that exclude or adjust certain items. We present within this Quarterly Report on Form 10-Q the non-GAAP financial measures earnings before interest, taxes, depreciation, amortization and stock-based compensation (“EBITDAS”) and net debt. See “—Liquidity and Capital Resources—~~EBITDAS”~~EBITDAS and Net Debt” for the calculations. Our management believes these non-GAAP financial measures provide useful supplemental information to investors regarding the performance of our business and are useful for period-over-period comparisons of the performance of our business. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly entitled measures reported by other companies.

As exchange rates are an important factor in understanding period-to-period comparisons, we believe in certain cases 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~~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 or being on a constant currency basis. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP and are not meant to be considered in isolation. 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.

We review goodwill and other indefinite-lived intangible assets, including franchise rights acquired with indefinite lives, for potential impairment on at least an annual basis or more often if events so require. We performed fair value impairment testing as of May ~~7, 2017~~5, 2019 and May ~~8, 2016,~~6, 2018, each the first day of fiscal May, on our goodwill and other indefinite-lived intangible assets.

In performing our goodwill impairment analysis for our reporting units for fiscal ~~2017~~2019 and fiscal ~~2016,~~2018, no impairment was identified as the respective fair ~~value~~values of ~~those units~~each reporting unit exceeded ~~their respective~~its carrying value. In performing the impairment analysis for our franchise rights acquired with indefinite lives for fiscal ~~2017~~2019 and fiscal ~~2016,~~2018, we determined that the carrying amounts of these units of account did not exceed their respective units of account fair values and therefore no impairment existed.

With respect to our impairment analysis, a change in the underlying assumptions would likely cause a change in the results of the impairment assessments and, as such, could result in an impairment of those assets, which would impact earnings. We would also be required to reduce the carrying amounts of the related assets on our balance sheet. We continue to evaluate these assumptions and believe that they are appropriate.

In performing our annual impairment analysis, we also considered the trading value of both our equity and debt. If the trading values of both our equity and debt were to significantly decline from their current levels, we may have to take an impairment charge at the appropriate time, which could be material. For additional information on risks associated with our recognizing asset impairment charges, see “Item 1A. Risk Factors” of our Annual Report on Form 10-K for fiscal 2018.

The following is a more detailed discussion of our ~~fiscal 2017~~ goodwill and franchise rights acquired impairment analysis.

In performing the impairment analysis for goodwill, the fair value for our reporting units is estimated using a discounted cash flow approach. This approach involves projecting future cash flows attributable to the reporting unit and discounting those estimated cash flows using an appropriate discount rate. The estimated fair value is then compared to the carrying value of the reporting ~~units.~~unit. We have determined the appropriate reporting unit for purposes of assessing annual impairment to be the country for all reporting units. The values of goodwill in the United States, Canada, Brazil and other countries ~~at September 30, 2017~~as of the June 29, 2019 balance sheet date were ~~$97.8~~$98.9 million, ~~$43.0~~$40.9 million, ~~$19.5~~$4.6 million and ~~$10.4~~$9.6 million, respectively.

Based on the results of our annual goodwill impairment test performed for all of our reporting units, except for Brazil, as of the ~~first day of fiscal May (May 7, 2017), we estimated that~~June 29, 2019 balance sheet date, for reporting units that hold ~~approximately 88.9%~~97.0% of our goodwill, those units had aan estimated fair value at least ~~50%~~60% higher than the respective reporting unit’s carrying amount. InBased on the results of our annual goodwill impairment test performed for our Brazil ~~which~~reporting unit as of the June 29, 2019 balance sheet date, this reporting unit holds ~~11.1%~~3.0% of our goodwill, and the estimated fair value of this reporting unit ~~exceeded~~was approximately 3% higher than its carrying ~~value by approximately 10%.~~value. Accordingly, a change in the underlying assumptions for Brazil would likely cause a change in the results of the impairment assessment and, as such, could result in an impairment of the goodwill.

For all of our reporting units except for Brazil (see below), we estimated future cash flows by utilizing the historical debt-free cash flows (cash flows provided by operating activities less capital expenditures) attributable to that country and then applied expected future operating income growth rates for such country. We utilized operating income as the basis for measuring our potential growth because we believe it is the best indicator of the performance of our business. We then discounted the estimated future cash flows utilizing a discount rate which was calculated using the average cost of capital, which included the cost of equity and the cost of debt.

The cost of equity was determined by combining a risk-free rate of return and a market risk premium for the Company’s peer group. The risk-free rate of return was determined based on the average rate of long-term U.S. Treasury securities. The market risk premium was determined by reviewing external market data. The cost of debt was determined by estimating our current borrowing rate.

The following are the more significant assumptions utilized in our annual impairment ~~analysis~~analyses (except for Brazil) for fiscal ~~2017~~2019 and fiscal ~~2016:~~2018:

	July 1,		July 2,		June 29,	June 30,
	2017		2016		2019	2018
Debt-Free Cumulative Annual Cash Flow Growth Rate	3.6% to 4.1%		3.1% to 4.9%		4.2%	3.8% to 5.4%
Discount Rate		8.9%		9.4%	9.0%	8.7%

As it relates to our goodwill impairment analysis for Brazil, we estimated future ~~debt free~~debt-free cash flows in contemplation of our growth strategies for that market. In developing these projections, we considered the historical impact of similar growth strategies in other markets as well as the current market conditions in Brazil. We then discounted the estimated future cash flows utilizing a discount rate which was calculated using the average cost of capital, which included the cost of equity and the cost of debt. The cost of equity was determined by combining a risk-free rate of return and a market risk premium for ~~the Company’s~~our peer group. The risk-free rate of return was determined based on the average rate of long-term U.S. Treasury securities. The market risk premium was determined by reviewing external market data including the current economic conditions in Brazil and the country specific risk ~~thereon. A further risk premium was included to reflect the risk associated with the rate of growth projected~~thereon, all as reflected in the ~~analysis.~~discount rate. The cost of debt was determined by estimating the Company’s current borrowing rate.

~~The~~For Brazil, the following are the more significant assumptions utilized in our annual goodwill impairment ~~analysis for Brazil~~analyses for fiscal ~~2017~~2019 and fiscal ~~2016:~~2018:

	July 1,		July 2,		June 29,	June 30,
	2017		2016		2019	2018
Cumulative Annual Revenue Cash Flow Growth Rate		19.4%		19.0%	13.0%	14.8%
Average Operating Income Margin		18.6%		20.0%	10.2%	3.7%
Average Operating Income Margin Range	(10.8%) to 31.0%		(6.9%) to 31.0%		(25.3%) to 24.3%	(17.3%) to 16.5%
Discount Rate		16.9%		16.8%	16.0%	16.2%

In performing the impairment analysis for our indefinite-lived franchise rights acquired, the fair value for our franchise rights acquired is estimated using a discounted cash flow approach referred to as the hypothetical start-up approach for our franchise rights related to our ~~meetings~~Studio + Digital business and a relief from royalty methodology for our franchise rights related to our ~~Online~~Digital business. The aggregate estimated fair value for these rights is then compared to the carrying value of the unit of account for those franchise rights. We have determined the appropriate unit of account for purposes of assessing impairment to be the combination of the rights in both the ~~meetings~~Studio + Digital business and ~~Online businesses~~Digital business in the country in which the ~~acquisitions have~~applicable acquisition occurred. The book values of these franchise rights in the United States, Canada, United Kingdom, Australia, and New Zealand at ~~September 30, 2017~~June 29, 2019 were $671.9 million, ~~$58.0~~$55.1 million, ~~$12.7~~$11.4 million, ~~$7.0~~$6.3 million, and ~~$5.1~~$4.8 million, respectively.

Based on the results of our fiscal ~~2017~~2019 annual franchise rights acquired impairment analysis ~~we estimated~~for all of our units of account, except for New Zealand, as of the June 29, 2019 balance sheet date, for units of account that ~~approximately 100.0%~~hold 99.4% of our franchise rights acquired, those units had aan estimated fair value at least 40% higher than ~~their~~the respective units of account carrying amount. Based on the results of our annual franchise rights acquired impairment test performed for our New Zealand unit of account as of the June 29, 2019 balance sheet date, this unit of account holds 0.6% of our franchise rights acquired, and the estimated fair value of this unit of account was approximately 3% higher than its carrying value. Accordingly, a change in the underlying assumptions for New Zealand would likely cause a change in the results of the impairment assessment and, as such, could result in an impairment of the franchise rights acquired.

In our hypothetical start-up approach analysis for fiscal ~~2017,~~2019, we assumed that the year of maturity was reached after 7 years. Subsequent to the year of maturity, we estimated future cash flows for the ~~meetings~~Studio + Digital business in each country based on

assumptions regarding revenue growth and operating income margins. The cash flows associated with the ~~Online~~Digital business in each country were based on the expected ~~Online~~Digital revenue for such country and the application of a market-based royalty rate. The cash flows for the ~~meetings~~Studio + Digital and ~~Online~~Digital businesses were discounted utilizing rates consistent with those utilized in the annual goodwill impairment analysis.

In performing this impairment analysis for fiscal ~~2017,~~2019, for the year of maturity, we assumed ~~meeting room~~Studio + Digital revenue (comprised of ~~Meeting~~Studio + Digital Fees ~~(defined hereafter)~~ and revenues from products sold to members in ~~meetings)~~workshops) growth of ~~16.2%~~(5.3%) to ~~58.3%~~3.5% in the year of maturity from fiscal ~~2016,~~2018, in each case, earned in the applicable country and assumed cumulative annual revenue growth rates for the years beyond the year of maturity of ~~1.9%~~1.6%. For the year of maturity and beyond, we assumed operating income margin rates of ~~7.1%~~0.3% to ~~22.5%~~17.4%.

For a discussion of the other 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 ~~2016.~~2018. Our critical accounting policies have not changed since the end of fiscal ~~2016.~~2018.

Our management reviews and analyzes several key performance indicators in order to manage our business and assess the quality and potential variability of our cash flows and earnings. These key performance indicators include:

THREE MONTHS ENDED ~~SEPTEMBER 30, 2017~~JUNE 29, 2019 COMPARED TO THE THREE MONTHS ENDED ~~OCTOBER 1, 2016~~JUNE 30, 2018

The table below sets forth selected financial information for the ~~third~~second quarter of fiscal ~~2017~~2019 from our consolidated statements of net income for the three months ended ~~September 30, 2017~~June 29, 2019 versus selected financial information for the ~~third~~second quarter of fiscal ~~2016~~2018 from our consolidated statements of net income for the three months ended ~~October 1, 2016:~~June 30, 2018:

	(In millions, except per share amounts)															(In millions, except per share amounts)
	For The Three Months Ended															For The Three Months Ended													% Change
	September 30, 2017			October 1, 2016			Increase/ (Decrease)			% Change			% Change Constant Currency			June 29, 2019			June 30, 2018			Increase/ (Decrease)			% Change				Constant Currency
Revenues, net	$	323.7		$	280.8		$	42.9			15.3	%		13.9	%	$	369.0		$	409.7		$	(40.7	)		(9.9	%)			(8.1	%)
Cost of revenues		146.6			136.5			10.1			7.4	%		6.3	%		153.2			165.0			(11.7	)		(7.1	%)			(5.4	%)

Gross profit		177.1			144.3			32.8			22.7	%		21.0	%		215.8			244.8			(29.0	)		(11.8	%)			(9.9	%)
Gross Margin %		54.7	%		51.4	%											58.5	%		59.7	%

Marketing expenses		30.3			30.1			0.2			0.8	%		(0.6	)%		50.0			55.4			(5.5	)		(9.8	%)			(7.4	%)
Selling, general & administrative expenses		55.4			47.4			8.0			16.8	%		15.8	%		60.4			61.7			(1.3	)		(2.1	%)			(0.5	%)

Operating income		91.4			66.8			24.6			36.8	%		34.4	%		105.5			127.7			(22.2	)		(17.4	%)			(15.6	%)
Operating Income Margin %		28.2	%		23.8	%											28.6	%		31.2	%

Interest expense		27.0			28.3			(1.3	)		(4.7	%)		(4.7	%)		34.7			35.9			(1.1	)		(3.2	%)			(3.2	%)
Other expense (income), net		0.1			(0.1	)		0.2			100.0	%		100.0	%
Other expense, net																	0.4			1.3			(0.9	)		67.1	%			67.1	%
Income before income taxes		64.3			38.6			25.7			66.4	%		62.3	%		70.3			90.5			(20.2	)		(22.3	%)			(19.8	%)

Provision for income taxes		19.6			4.0			15.6		100.0%			100.0%				16.6			19.8			(3.2	)		(16.3	%)			(12.8	%)
Net income		44.7			34.6			10.0			29.0	%		25.8	%		53.7			70.7			(17.0	)		(24.0	%)			(21.7	%)
Net loss attributable to the noncontrolling interest		0.1			0.0			0.0			35.6	%		31.7	%		0.1			0.0			0.1		100.0		%	*	100.0		%	*

Net income attributable to Weight Watchers International, Inc.	$	44.7		$	34.7		$	10.1			29.0	%		25.8	%	$	53.8		$	70.7		$	(16.9	)		(23.9	%)			(21.6	%)

Weighted average diluted shares outstanding		68.7			65.8			2.8			4.3	%		4.3	%		69.1			70.2			(1.0	)		(1.4	%)			(1.4	%)
Diluted earnings per share	$	0.65		$	0.53		$	0.12			23.7	%		20.6	%	$	0.78		$	1.01		$	(0.23	)		(22.8	%)			(20.4	%)

Revenues in the ~~third~~second quarter of fiscal ~~2017~~2019 were ~~$323.7~~$369.0 million, ~~an increase~~a decrease of ~~$42.9~~$40.7 million, or ~~15.3%~~9.9%, versus the ~~third~~second quarter of fiscal ~~2016.~~2018. Excluding the impact of foreign currency, which ~~positively~~negatively impacted our revenues for the ~~third~~second quarter of fiscal ~~2017~~2019 by ~~$3.9~~$7.5 million, revenues in the ~~third~~second quarter of fiscal ~~2017~~2019 would have ~~increased 13.9%~~decreased 8.1% versus the prior year period. This ~~increase~~decrease was driven primarily by the revenue ~~growth~~declines in ~~all major markets.~~North America. See “—Segment Results” for additional details on revenues.

Total cost of revenues in the ~~third~~second quarter of fiscal ~~2017 increased $10.1~~2019 decreased $11.7 million, or ~~7.4%~~7.1%, versus the prior year period. Gross profit ~~increased $32.8~~decreased $29.0 million, or ~~22.7%~~11.8%, in the ~~third~~second quarter of fiscal ~~2017~~2019 compared to the ~~third~~second quarter of fiscal ~~2016~~2018 primarily due to the ~~increase~~decrease in revenues. Excluding the impact of foreign currency, which ~~positively~~negatively impacted gross profit for the ~~third~~second quarter of fiscal ~~2017~~2019 by ~~$2.5~~$4.6 million, gross profit in the ~~third~~second quarter of fiscal ~~2017~~2019 would have ~~increased 21.0%~~decreased 9.9% versus the prior year period. Gross margin in the ~~third~~second quarter of fiscal ~~2017 increased 3.3%~~2019 decreased 1.3% to ~~54.7%~~58.5% versus ~~51.4%~~59.7% in the ~~third~~second quarter of fiscal ~~2016.~~2018. Gross margin ~~expansion~~decline was driven primarily ~~driven~~ by ~~improved leverage in both the meetings~~fixed cost deleverage and ~~Online businesses and~~partially offset by a mix shift to the higher margin ~~Online~~Digital business. ~~This expansion was partially offset by lower revenues in our high margin licensing business.~~

Marketing expenses for the ~~third~~second quarter of fiscal ~~2017 increased $0.2~~2019 decreased $5.5 million, or ~~0.8%~~9.8%, versus the ~~third~~second quarter of fiscal ~~2016.~~2018. Excluding the impact of foreign currency, which ~~increased~~decreased marketing expenses for the ~~third~~second quarter of fiscal ~~2017~~2019 by ~~$0.4~~$1.3 million, marketing expenses in the ~~third~~second quarter of fiscal ~~2017~~2019 would have decreased ~~0.6%~~7.4% versus the ~~third~~second quarter of fiscal ~~2016.~~2018. This decrease in marketing expense was largely due to decreased TV media and production costs, all on a global basis. Marketing expenses as a percentage of revenue ~~were 9.4%~~was 13.5% in both the ~~third~~second quarter of fiscal ~~2017 as compared to 10.7% in the prior year period.~~2019 and fiscal 2018.

Selling, general and administrative expenses for the ~~third~~second quarter of fiscal ~~2017 increased $8.0~~2019 decreased $1.3 million, or ~~16.8%~~2.1%, versus the ~~third~~second quarter of fiscal ~~2016.~~2018. Excluding the impact of foreign currency, which ~~increased~~decreased selling, general and administrative expenses for the ~~third~~second quarter of fiscal ~~2017~~2019 by ~~$0.4~~$1.0 million, selling, general and administrative expenses in the ~~third~~second quarter of fiscal ~~2017~~2019 would have ~~increased 15.8%~~decreased 0.5% versus the prior year period. The ~~increase~~decrease in selling, general and administrative expenses in the ~~third~~second quarter of fiscal ~~2017~~2019 was driven primarily ~~driven~~ by ~~higher compensation and incentive related costs.~~lower professional fees in the quarter. Selling, general and administrative expenses as a percentage of revenue ~~were 17.1%~~ for the ~~third~~second quarter of fiscal ~~2017 as compared~~2019 increased to ~~16.9%~~16.4% from 15.0% for the ~~third~~second quarter of fiscal ~~2016.~~2018.

Operating income ~~for~~in the ~~third~~second quarter of fiscal ~~2017 increased $24.6~~2019 decreased $22.2 million, or ~~36.8%~~17.4%, versus the ~~third quarter of fiscal 2016.~~prior year period. Excluding the impact of foreign currency, which ~~positively~~negatively impacted operating income for the ~~third~~second quarter of fiscal ~~2017~~2019 by ~~$1.6~~$2.3 million, operating income in the ~~third~~second quarter of fiscal ~~2017~~2019 would have ~~increased 34.4%~~decreased 15.6% versus the prior year period. This ~~increase~~decrease in operating income was driven by ~~higher~~lower operating income in all ~~major markets~~reportable segments as compared to the prior year period. Operating income margin ~~increased 4.4% for~~in the ~~third~~second quarter of fiscal ~~2017 compared~~2019 decreased 2.6% to 28.6% versus 31.2% in the ~~third~~second quarter of fiscal ~~2016.~~2018. This ~~increase~~decrease in operating income margin was driven primarily ~~driven~~ by a decrease in gross margin and an increase in ~~gross margin~~selling, general and administrative expenses as ~~compared to the prior year period.~~a percentage of revenue.

Interest expense in the ~~third~~second quarter of fiscal ~~2017~~2019 decreased ~~$1.3~~$1.1 million, or ~~4.7%~~3.2%, versus the ~~third~~second quarter of fiscal ~~2016.~~2018. The decrease in interest expense was driven primarily by ~~(i) the decrease in the notional amount of our interest rate swap from $1.5 billion to $1.25 billion and (ii) the~~a decrease in our ~~average debt~~ outstanding ~~which decreased to $1.9 billion in the third quarter of fiscal 2017~~indebtedness resulting from ~~$2.0 billion in the third quarter of fiscal 2016. These decreases were offset by an increase in LIBOR rates.~~principal repayments. The effective interest rate on our debt, based on interest incurred (which includes amortization of our deferred financing ~~costs)~~costs and debt discount) and our average borrowings during the ~~third~~second quarter of fiscal ~~2017~~2019 and the ~~third~~second quarter of fiscal ~~2016~~2018 and excluding the impact of our interest rate swap in effect, increased to ~~4.85%~~8.12% per annum at the end of the ~~third~~second quarter of fiscal ~~2017~~2019 from ~~4.33%~~7.73% per annum at the end of the ~~third~~second quarter of fiscal ~~2016.~~2018. Including the impact of our interest rate swap ~~our~~in effect, the effective interest rate on our debt, based on interest incurred (which includes amortization of our deferred financing ~~costs)~~costs and debt discount) and our average borrowings during the ~~third~~second quarter of fiscal ~~2017~~2019 and the ~~third~~second quarter of fiscal ~~2016,~~2018, increased to ~~5.56%~~8.00% per annum at the end of the ~~third~~second quarter of fiscal ~~2017~~2019 from ~~5.53%~~7.80% per annum at the end of the ~~third~~second quarter of fiscal ~~2016.~~ 2018. See “—Liquidity and Capital Resources—Long-Term Debt” for additional details regarding our debt, including interest rates ~~on our debt outstanding~~ and payments ~~on our debt.~~ thereon. For additional details on our interest rate ~~swap,~~swaps, see “Item 3. Quantitative and Qualitative Disclosures about Market Risk” in Part I of this Quarterly Report on Form 10-Q.

Other expense, ~~(income),~~ net, which consists primarily of the impact of foreign currency on intercompany transactions, ~~increased~~decreased by ~~$0.2~~$0.9 million in the ~~third~~second quarter of fiscal ~~2017~~2019 to ~~$0.1~~$0.4 million of expense as compared to ~~$0.1~~$1.3 million of ~~income~~expense in the prior year period.

Our effective tax rate for the ~~third~~second quarter of fiscal ~~2017~~2019 was ~~30.5%~~23.6% as compared to ~~10.3%~~21.9% for the ~~third~~second quarter of fiscal ~~2016.~~2018. The effective tax rate in the ~~third~~second quarter of fiscal ~~2017 reflects~~2019 was impacted by a ~~one-time~~$0.9 million tax expense related to global intangible low-taxed income, or GILTI. The GILTI tax expense was partially offset by a $1.4 million tax benefit ~~of $2.3 million~~ related to athe reversal of tax reserves ~~resulting from an updated transfer pricing study. The~~no longer needed, a $0.8 million tax benefit related to the cessation of certain publishing operations and a $0.6 million tax benefit related to foreign-derived intangible income, or FDII. Our effective tax rate in the ~~third~~second quarter of fiscal ~~2016~~2018 was impacted by ~~an $11.4~~the $4.1 million ~~net~~ tax benefit ~~due~~related to ~~a research and development credit and a Section 199 deduction for~~ tax ~~years 2012 through 2015, partially offset by $2.7 million of out-of-period adjustments in income taxes in the third quarter of fiscal 2016.~~windfalls from stock compensation.

Net income attributable to the Company in the ~~third~~second quarter of fiscal ~~2017 increased $10.1~~2019 reflected a $16.9 million, or ~~29.0%~~23.9%, decline from the ~~third~~second quarter of fiscal ~~2016.~~ 2018. Excluding the impact of foreign currency, which ~~positively~~negatively impacted net income attributable to the Company in the ~~third~~second quarter of fiscal ~~2017~~2019 by ~~$1.1~~$1.6 million, net income attributable to the Company in the ~~third~~second quarter of fiscal ~~2017~~2019 would have ~~increased by 25.8% versus~~declined 21.6% from the ~~prior year period.~~ second quarter of fiscal 2018.

Earnings per fully diluted share, or EPS, in the ~~third~~second quarter of fiscal ~~2017~~2019 was ~~$0.65~~$0.78 compared to ~~$0.53~~$1.01 in the ~~third~~second quarter of fiscal 2016. Earnings per fully diluted share for the third quarter of fiscal 2017 included a $0.03 tax benefit related to the reversal of tax reserves resulting from an updated transfer pricing study. This benefit was offset by the higher share count in the third quarter of fiscal 2017 which was driven by the higher average stock price, which, diluted EPS by $0.03. Earnings per fully diluted share for the third quarter of fiscal 2016 included a $0.13 net benefit driven by a lower tax rate of 10.3% for the third quarter of fiscal 2016. This benefit was primarily comprised of a $0.17 net tax benefit in connection with a research and development credit and a Section 199 deduction for the tax years 2012 through 2015, partially offset by a $0.04 expense for out-of-period tax adjustments.2018.

The following tables set forth key metrics by reportable segment for the ~~third~~second quarter of fiscal ~~2017~~2019 and the percentage change in those metrics versus the prior year period:

	Q2 2019
	GAAP									Constant Currency
				Product									Product						Total
	Service			Sales &			Total			Service			Sales &			Total			Paid			Incoming			EOP
	Revenues			Other			Revenues			Revenues			Other			Revenues			Weeks			Subscribers			Subscribers
																						(in thousands)
North America	$	219.8		$	35.8		$	255.6		$	220.3		$	35.9		$	256.2			39.2			2,950.5			2,940.7
CE		67.3			10.1			77.3			71.4			10.7			82.1			15.1			1,157.5			1,137.6
UK		18.5			6.0			24.5			19.6			6.4			25.9			5.2			391.9			387.0
Other ⁽¹⁾		8.2			3.3			11.5			8.9			3.4			12.3			1.3			109.6			102.8
Total	$	313.8		$	55.3		$	369.0		$	320.1		$	56.4		$	376.5			60.8			4,609.5			4,568.1

	% Change Q2 2019 vs.Q2 2018
North America		(9.9	%)		(11.9	%)		(10.2	%)		(9.6	%)		(11.7	%)		(9.9	%)		(4.2	%)		(2.8	%)		(1.9	%)
CE		(2.1	%)		(21.7	%)		(5.2	%)		3.8	%		(16.8	%)		0.6	%		10.7	%		11.3	%		11.5	%
UK		(14.0	%)		(21.7	%)		(16.0	%)		(9.0	%)		(17.2	%)		(11.2	%)		(1.5	%)		0.7	%		0.9	%
Other ⁽¹⁾		(14.7	%)		(30.6	%)		(20.0	%)		(7.9	%)		(28.2	%)		(14.7	%)		(2.6	%)		2.9	%		2.0	%
Total		(8.7	%)		(16.3	%)		(9.9	%)		(6.9	%)		(14.5	%)		(8.1	%)		(0.6	%)		0.9	%		1.5	%

Q3 2017

GAAP

Constant Currency

Product

Product

Total

Service

Sales &

Total

Service

Sales &

Total

Paid

Incoming

EOP

Revenues

Other

Revenues

Revenues

Other

Revenues

Weeks

Subscribers

Subscribers

(in thousands)

North America

$
193.7

$
29.9

$
223.7

$
193.2

$
29.9

$
223.0

30.0

2,332.5

2,200.2

UK

19.0

6.5

25.5

19.1

6.5

25.6

4.4

332.9

320.7

CE

51.2

9.5

60.7

48.7

9.0

57.7

9.9

784.1

756.7

Other ⁽¹⁾

9.3

4.5

13.9

9.0

4.4

13.4

1.2

77.7

77.9

Total

$
273.2

$
50.5

$
323.7

$
269.9

$
49.9

$
319.8

45.4

3,527.2

3,355.5

% Change Q3 2017 vs. Q3 2016

North America

17.0
%

9.5
%

16.0
%

16.7
%

9.2
%

15.6
%

21.0
%

21.5
%

19.1
%
UK

9.8
%

4.7
%

8.5
%

10.2
%

4.9
%

8.8
%

9.5
%

10.9
%

6.5
%
CE

26.1
%

(5.9
%)

19.7
%

20.0
%

(10.5
%)

13.9
%

23.8
%

22.1
%

23.8
%
Other ⁽¹⁾

1.8
%

(1.4
%)

0.8
%

(1.7
%)

(3.6
%)

(2.4
%)

1.0
%

3.4
%

4.5
%
Total

17.5
%

4.6
%

15.3
%

16.1
%

3.3
%

13.9
%

19.8
%

20.1
%

18.4
%

	Q3 2017																														Q2 2019
	Meeting Fees						Meeting			Incoming			EOP			Online Subscription Revenues						Online			Incoming			EOP			Digital Subscription Revenues						Digital			Incoming			EOP			Studio + Digital Fees						Studio + Digital			Incoming			EOP
				Constant			Paid			Meeting			Meeting						Constant			Paid			Online			Online						Constant			Paid			Digital			Digital						Constant			Paid			Studio + Digital			Studio + Digital
	GAAP			Currency			Weeks			Subscribers			Subscribers			GAAP			Currency			Weeks			Subscribers			Subscribers			GAAP			Currency			Weeks			Subscribers			Subscribers			GAAP			Currency			Weeks			Subscribers			Subscribers
										(in thousands)															(in thousands)															(in thousands)															(in thousands)
North America	$	122.4		$	122.1			13.0			980.2			924.9		$	71.3		$	71.1			17.0			1,352.4			1,275.3		$	102.9		$	103.1			26.0			1,968.2			1,995.8		$	117.0		$	117.2			13.1			982.3			944.9
CE																																43.6			46.3			12.0			913.9			914.5			23.7			25.1			3.1			243.6			223.1
UK		13.3			13.4			2.6			188.8			180.3			5.7			5.7			1.8			144.1			140.4			7.0			7.4			2.5			192.8			195.0			11.5			12.2			2.7			199.1			192.0
CE		23.4			22.3			2.7			216.7			206.2			27.7			26.4			7.2			567.3			550.5
Other ⁽¹⁾		6.5			6.3			0.7			35.5			35.6			2.9			2.7			0.5			42.2			42.3			3.5			3.8			0.8			61.4			59.3			4.7			5.0			0.6			48.1			43.4
Total	$	165.6		$	164.0			18.9			1,421.2			1,346.9		$	107.6		$	105.9			26.6			2,106.0			2,008.6		$	157.0		$	160.6			41.3			3,136.3			3,164.7		$	156.8		$	159.5			19.5			1,473.0			1,403.4

	% Change Q3 2017 vs. Q3 2016																														% Change Q2 2019 vs. Q2 2018
North America		13.8	%		13.4	%		14.5	%		16.2	%		14.1	%		23.1	%		22.7	%		26.5	%		25.7	%		23.1	%		1.7	%		2.0	%		2.2	%		2.8	%		4.3	%		(18.1	%)		(17.9	%)		(14.9	%)		(12.2	%)		(12.7	%)
CE																																10.8	%		17.6	%		17.8	%		18.2	%		18.3	%		(19.5	%)		(14.6	%)		(10.5	%)		(8.7	%)		(9.8	%)
UK		5.2	%		5.6	%		4.6	%		6.1	%		1.1	%		22.4	%		22.8	%		17.3	%		18.1	%		14.4	%		0.5	%		6.3	%		6.5	%		7.5	%		8.4	%		(21.0	%)		(16.4	%)		(8.0	%)		(5.0	%)		(5.7	%)
CE		10.0	%		4.8	%		4.9	%		4.0	%		4.9	%		43.8	%		36.8	%		32.8	%		30.8	%		32.7	%
Other ⁽¹⁾		1.2	%		(2.2	%)		3.4	%		7.6	%		7.9	%		3.3	%		(0.7	%)		(1.8	%)		0.1	%		1.8	%		(2.3	%)		5.6	%		4.0	%		6.2	%		6.9	%		(22.2	%)		(16.1	%)		(10.2	%)		(1.0	%)		(4.0	%)
Total		12.0	%		10.8	%		11.2	%		12.5	%		10.6	%		27.1	%		25.2	%		26.7	%		25.8	%		24.4	%		3.9	%		6.3	%		6.6	%		7.2	%		8.3	%		(18.6	%)		(17.2	%)		(13.2	%)		(10.4	%)		(11.1	%)

The ~~increase~~decrease in North America revenues in the ~~third~~second quarter of fiscal ~~2017~~2019 versus the prior year period was ~~primarily~~ driven by both a decrease in Service Revenues and a decrease in product sales and other. This decrease in Service Revenues in the second quarter of fiscal 2019 versus the prior year period was driven primarily by the decrease in Studio + Digital Fees, partially offset by an increase in ~~Service~~Digital Subscription Revenues. The ~~increase~~decrease in North America Total Paid Weeks was driven by lower recruitments in the quarter partially offset by the higher number of Incoming Digital Subscribers at the beginning of the second quarter of fiscal 2019 versus the beginning of the second quarter of fiscal 2018.

The decrease in North America product sales and other in the second quarter of fiscal 2019 versus the prior year period was driven primarily by a decrease in product sales.

The decrease in Continental Europe revenues in the second quarter of fiscal 2019 versus the prior year period was driven by the impact of foreign currency. Excluding foreign currency, revenues in the second quarter of fiscal 2019 would have increased slightly above the prior year period driven by an increase in Service Revenues. This increase in Service Revenues in the second quarter of fiscal 2019 versus the prior year period was driven by an increase in Digital Subscription Revenues, partially offset by a decrease in Studio + Digital Fees. The increase in Continental Europe Total Paid Weeks was driven primarily by the higher number of Incoming Digital Subscribers at the beginning of the second quarter of fiscal 2019 versus the beginning of the second quarter of fiscal 2018, partially offset by lower Studio + Digital recruitments in the second quarter of fiscal 2019.

The decrease in Continental Europe product sales and other in the second quarter of fiscal 2019 versus the prior year period was driven primarily by a decrease in product sales.

The decrease in UK revenues in the second quarter of fiscal 2019 versus the prior year period was driven by both the decrease in Service Revenues and product sales and other. This decrease in Service Revenues in the second quarter of fiscal 2019 versus the prior year period was driven primarily by the decrease in Studio + Digital Fees. The decrease in UK Total Paid Weeks was driven by lower Studio + Digital recruitments in the quarter partially offset by the higher number of Incoming Subscribers at the beginning of the ~~third~~second quarter of fiscal ~~2017~~2019 versus the beginning of the ~~third~~second quarter of fiscal ~~2016, improved retention versus the prior year period and recruitment strength in our Online business in the third quarter of fiscal 2017 versus the prior year period.~~2018.

The increase in North America product sales and other in the third quarter of fiscal 2017 versus the prior year period was primarily driven by an increase in product sales partially offset by a decline in licensing revenue.

The increase in UK revenues in the third quarter of fiscal 2017 versus the prior year period was primarily driven by the increase in Service Revenues. This increase in Service Revenues in the third quarter of fiscal 2017 versus the prior year period was primarily the result of an increase in Online Subscription Revenues and improved retention.

~~The increase~~decrease in UK product sales and other in the ~~third~~second quarter of fiscal ~~2017~~2019 versus the prior year period was driven primarily ~~driven~~ by ~~an increase~~a decrease in product ~~sales, partially offset by a decline in licensing revenue.~~sales.

The ~~increase~~decrease in ~~Continental Europe~~Other revenues in the ~~third~~second quarter of fiscal ~~2017~~2019 versus the prior year period was ~~primarily~~ driven by ~~the increase~~both a decrease in Service ~~Revenues.~~Revenues and a decrease in product sales and other. The ~~increase~~decrease in ~~Continental Europe Total Paid Weeks was driven by~~Service Revenues in the ~~higher number of Incoming Subscribers at the beginning of the third~~second quarter of fiscal ~~2017 versus the beginning of the third quarter of fiscal 2016, improved retention~~2019 versus the prior year period ~~and recruitment strength~~was driven primarily by the decrease in ~~our Online business in the third quarter of fiscal 2017 versus the prior year period.~~Studio + Digital Fees.

The ~~increase~~decrease in ~~Continental Europe Service Revenues was partially offset by the decline in Continental Europe~~Other product sales and other in the ~~third~~second quarter of fiscal ~~2017 versus the prior year period.~~

~~The decline in Other revenues in the third quarter of fiscal 2017~~2019 versus the prior year period was ~~primarily~~ driven ~~by the positive impact of foreign currency. Excluding the impact of foreign currency, Other revenues would have decreased, driven~~primarily by a decrease in ~~Service Revenues due to price discounting.~~

~~The decrease in~~both product sales and other in the third quarter of fiscal 2017 versus the third quarter of fiscal 2016 was primarily driven by a decrease in other product sales partially offset by commissions received from our franchisees.franchise commissions.

~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER 30, 2017~~JUNE 29, 2019 COMPARED TO THE ~~NINE~~SIX MONTHS ENDED ~~OCTOBER 1, 2016~~JUNE 30, 2018

The table below sets forth selected financial information for the first ~~nine~~six months of fiscal ~~2017~~2019 from our consolidated statements of net income for the ~~nine~~six months ended ~~September 30, 2017~~June 29, 2019 versus selected financial information for the first ~~nine~~six months of fiscal ~~2016~~2018 from our consolidated statements of net income for the ~~nine~~six months ended ~~October 1, 2016:~~June 30, 2018:

	(In millions, except per share amounts)
	For The Nine Months Ended															(In millions, except per share amounts)
																For The Six Months Ended												% Change
	September 30, 2017			October 1, 2016			Increase/ (Decrease)			% Change			% Change Constant Currency			June 29, 2019			June 30, 2018			Increase/ (Decrease)			% Change			Constant Currency
Revenues, net	$	994.4		$	897.5		$	96.9			10.8	%		11.5	%	$	732.2		$	818.0		$	(85.8	)		(10.5	%)		(8.3	%)
Cost of revenues		464.2			442.5			21.8			4.9	%		5.6	%		315.4			352.2			(36.8	)		(10.4	%)		(8.4	%)

Gross profit		530.2			455.0			75.2			16.5	%		17.2	%		416.8			465.8			(49.0	)		(10.5	%)		(8.3	%)
Gross Margin %		53.3	%		50.7	%											56.9	%		56.9	%

Marketing expenses		158.7			157.8			0.9			0.6	%		1.7	%		164.2			154.3			9.9			6.4	%		9.6	%
Selling, general & administrative expenses		153.7			143.2			10.5			7.3	%		7.7	%		125.2			121.7			3.5			2.9	%		4.8	%

Operating income		217.8			154.1			63.7			41.4	%		41.7	%		127.4			189.8			(62.4	)		(32.9	%)		(31.2	%)
Operating Income Margin %		21.9	%		17.2	%											17.4	%		23.2	%

Interest expense		82.2			87.0			(4.7	)		(5.4	%)		(5.4	%)		69.9			71.7			(1.8	)		(2.5	%)		(2.5	%)
Other expense, net		0.3			0.4			(0.1	)		29.9	%		29.9	%		0.7			1.1			(0.4	)		32.4	%		32.4	%
Gain on early extinguishment of debt		(1.6	)		0.0			(1.6	)		100.0	%		100.0	%
Income before income taxes		136.9			66.7			70.2			105.1	%		106.0	%		56.7			116.9			(60.2	)		(51.5	%)		(48.8	%)

Provision for income taxes		36.5			12.4			24.0		100.0%			100.0%				13.7			7.2			6.5			90.2	%	100.0		%	*
Net income		100.4			54.3			46.1			84.9	%		85.4	%		43.0			109.7			(66.8	)		(60.8	%)		(58.8	%)
Net loss attributable to the noncontrolling interest		0.1			0.1			0.0			36.4	%		18.5	%		0.2			0.1		��	0.1			74.4	%		86.2	%

Net income attributable to Weight Watchers International, Inc.	$	100.5		$	54.4		$	46.1			84.8	%		85.3	%	$	43.1		$	109.8		$	(66.7	)		(60.7	%)		(58.7	%)

Weighted average diluted shares outstanding		67.9			65.9			2.1			3.1	%		3.1	%		69.3			69.9			(0.6	)		(0.9	%)		(0.9	%)
Diluted earnings per share	$	1.48		$	0.83		$	0.65			79.2	%		79.7	%	$	0.62		$	1.57		$	(0.95	)		(60.3	%)		(58.3	%)

Revenues in the first ~~nine~~six months of fiscal ~~2017~~2019 were ~~$994.4~~$732.2 million, ~~an increase~~a decrease of ~~$96.9~~$85.8 million, or ~~10.8%~~10.5%, versus the first ~~nine~~six months of fiscal ~~2016.~~2018. Excluding the impact of foreign currency, which negatively impacted our revenues for the first ~~nine~~six months of

fiscal ~~2017~~2019 by ~~$6.0~~$17.7 million, revenues in the first ~~nine~~six months of fiscal ~~2017~~2019 would have ~~increased 11.5%~~decreased 8.3% versus the prior year period. This ~~increase~~decrease was driven primarily by the revenue ~~growth, on a constant currency basis,~~declines in ~~all major markets.~~North America. See “—Segment Results” for additional details on revenues.

Total cost of revenues in the first ~~nine~~six months of fiscal ~~2017 increased $21.8~~2019 decreased $36.8 million, or ~~4.9%~~10.4%, versus the prior year period. Gross profit ~~increased $75.2~~decreased $49.0 million, or ~~16.5%~~10.5%, in the first ~~nine~~six months of fiscal ~~2017~~2019 compared to the first ~~nine~~six months of fiscal ~~2016~~2018 primarily due to the ~~increase~~decrease in revenues. Excluding the impact of foreign currency, which negatively impacted gross profit for the first ~~nine~~six months of fiscal ~~2017~~2019 by ~~$2.9~~$10.6 million, gross profit in the first ~~nine~~six months of fiscal ~~2017~~2019 would have ~~increased 17.2%~~decreased 8.3% versus the prior year period. Gross margin in the first ~~nine~~six months of fiscal ~~2017 increased 2.6%~~2019 was flat when compared to ~~53.3% versus 50.7% in~~ the first ~~nine~~six months of fiscal 2016. Gross margin expansion was primarily driven by improved leverage in both the meetings and Online businesses and a mix shift to the higher margin Online business. This expansion was partially offset by lower revenues in our high margin licensing business.2018.

Marketing expenses for the first ~~nine~~six months of fiscal ~~2017~~2019 increased ~~$0.9~~$9.9 million, or ~~0.6%~~6.4%, versus the first ~~nine~~six months of fiscal ~~2016.~~2018. Excluding the impact of foreign currency, which decreased marketing expenses for the first ~~nine~~six months of fiscal ~~2017~~2019 by ~~$1.8~~$5.0 million, marketing expenses in the first ~~nine~~six months of fiscal ~~2017~~2019 would have increased ~~1.7%~~9.6% versus the first ~~nine~~six months of fiscal ~~2016.~~2018. This increase in marketing expense was largely due to increased Online media expense and agency and celebrity fees, all on a global basis. Marketing expenses as a percentage of revenue ~~decreased~~increased to ~~16.0%~~22.4% in the first ~~nine~~six months of fiscal ~~2017~~2019 as compared to ~~17.6%~~18.9% in the prior year period.

Selling, general and administrative expenses for the first ~~nine~~six months of fiscal ~~2017~~2019 increased ~~$10.5~~$3.5 million, or ~~7.3%~~2.9%, versus the first ~~nine~~six months of fiscal ~~2016.~~2018. Excluding the impact of foreign currency, which decreased selling, general and administrative expenses for the first ~~nine~~six months of fiscal ~~2017~~2019 by ~~$0.5~~$2.3 million, selling, general and administrative expenses in the first ~~nine~~six months of fiscal ~~2017~~2019 would have increased ~~7.7%~~4.8% versus the prior year period. The increase in selling, general and administrative expenses in the first ~~nine~~six months of fiscal ~~2017~~2019 was driven primarily ~~driven~~ by expenses related to our organizational realignment in the first quarter of 2019 and higher ~~compensation~~salary and ~~incentive~~ related ~~costs.~~costs partially offset by a reduction in professional fees. Selling, general and administrative expenses as a percentage of revenue for the first ~~nine~~six months of fiscal ~~2017 decreased~~2019 increased to ~~15.5%~~17.1% from ~~16.0%~~14.9% for the first ~~nine~~six months of fiscal ~~2016.~~2018.

Operating income ~~for~~in the first ~~nine~~six months of fiscal ~~2017 increased $63.7~~2019 decreased $62.4 million, or ~~41.4%~~32.9%, versus the ~~first nine months of fiscal 2016.~~prior year period. Excluding the impact of foreign currency, which negatively impacted operating income for the first ~~nine~~six months of fiscal ~~2017~~2019 by ~~$0.6~~$3.2 million, operating income in the first ~~nine~~six months of fiscal ~~2017~~2019 would have ~~increased 41.7%~~decreased 31.2% versus the prior year period. This ~~increase~~decrease in operating income was driven primarily by ~~higher~~lower operating income in all ~~major markets~~reportable segments as compared to the prior year period. Operating income margin ~~increased 4.7% for~~in the first ~~nine~~six months of fiscal ~~2017 compared~~2019 decreased 5.8% to 17.4% versus 23.2% in the first ~~nine~~six months of fiscal ~~2016.~~2018. This ~~increase~~decrease in operating income margin was driven primarily ~~driven~~ by an increase in ~~gross margin and to a lesser extent a decrease in~~ marketing ~~expenses~~ as a percentage of revenue and ~~a decrease~~an increase in selling, general and administrative expenses as a percentage of ~~revenue, all as compared to the prior year period.~~revenue.

Interest expense in the first ~~nine~~six months of fiscal ~~2017~~2019 decreased ~~$4.7~~$1.8 million, or ~~5.4%~~2.5%, versus the first ~~nine~~six months of fiscal ~~2016.~~2018. The decrease in interest expense was driven primarily by ~~(i) the decrease in the notional amount of our interest rate swap from $1.5 billion to $1.25 billion; (ii) the~~a decrease in our ~~average debt~~ outstanding ~~under the Tranche B-2 Term Facility (defined hereafter) which decreased to $2.0 billion in the first nine months of fiscal 2017~~indebtedness resulting from ~~$2.1 billion in the first nine months of fiscal 2016; (iii) the payment in full in April 2016 of the~~ principal amount of loans outstanding under the Tranche B-1 Term Facility (defined hereafter) and (iv) the aggregate payments in the third quarter of fiscal 2016 of the outstanding principal amount of $48.0 million on the Revolving Facility (defined hereafter). The increase in LIBOR rates offset the benefits set forth in items (i) through (iii).repayments. The effective interest rate on our debt, based on interest incurred (which includes amortization of our deferred financing ~~costs)~~costs and debt discount) and our average borrowings during the first ~~nine~~six months of fiscal ~~2017~~2019 and the first ~~nine~~six months of fiscal ~~2016~~2018 and excluding the impact of our interest rate swap in effect, increased to ~~4.68%~~8.17% per annum at the end of the first ~~nine~~six months of fiscal ~~2017~~2019 from ~~4.31%~~7.44% per annum at the end of the first ~~nine~~six months of fiscal ~~2016.~~2018. Including the impact of our interest rate swap ~~our~~in effect, the effective interest rate on our debt, based on interest incurred (which includes amortization of our deferred financing ~~costs)~~costs and debt discount) and our average borrowings during the first ~~nine~~six months of fiscal ~~2017~~2019 and the first ~~nine~~six months of fiscal ~~2016,~~2018, increased to ~~5.52%~~7.97% per annum at the end of the first ~~nine~~six months of fiscal ~~2017~~2019 from ~~5.48%~~7.72% per annum at the end of the first ~~nine~~six months of fiscal ~~2016.~~ 2018. See “—Liquidity and Capital Resources—Long-Term Debt” for additional details regarding our debt, including interest rates ~~on our debt outstanding, the Revolving Facility~~ and payments ~~on our debt.~~ thereon. For additional details on our interest rate ~~swap,~~swaps, see “Item 3. Quantitative and Qualitative Disclosures about Market Risk” in Part I of this Quarterly Report on Form 10-Q.

Other expense, net, which consists primarily of the impact of foreign currency on intercompany transactions, decreased by ~~$0.1~~$0.4 million in the first ~~nine~~six months of fiscal ~~2017~~2019 to ~~$0.3~~$0.7 million of expense as compared to ~~$0.4~~$1.1 million of expense in the prior year period.

In May 2017, we paid an aggregate amount of cash proceeds totaling $73.0 million plus an amount sufficient to pay accrued and unpaid interest on the amount prepaid to prepay $75.5 million in aggregate principal amount of term loans under the Tranche B-2 Term Facility. As a result of this prepayment, we wrote-off fees of $0.6 million, incurred fees of $0.3 million and recorded a gain on early extinguishment of debt of $1.6 million, inclusive of these fees, in the second quarter of fiscal 2017.

Our effective tax rate for the first ~~nine~~six months of fiscal ~~2017~~2019 was ~~26.6%~~24.2% as compared to ~~18.6%~~6.2% for the first ~~nine~~six months of fiscal ~~2016.~~2018. The effective tax rate ~~for~~in the first ~~nine~~six months of fiscal ~~2017~~2019 was impacted by a $1.8 million tax expense related to GILTI and $1.8 million of higher state income tax expenses versus the prior year period. The GILTI tax expense was partially offset by a $1.4 million tax benefit related to the reversal of tax reserves no longer needed, a $1.3 million tax benefit related to FDII and a $0.8 million tax benefit related to the cessation of certain publishing operations. Our effective tax rate in the first six months of fiscal 2018 was impacted by the ~~following one-time discrete items occurring in the first nine months of fiscal 2017: (i) an $11.6~~$22.2 million tax benefit related to tax windfalls from stock compensation and a $1.9 million tax benefit related to the cessation of operations of our Spanish subsidiary and (ii) by $2.3 million related to the reversal of tax reserves resulting from an updated transfer pricing study. The effective tax rate for the first nine months of fiscal 2016 was impacted by: (i) an $11.4 million net tax benefit due to a research and development credit and a Section 199 deduction for tax years 2012 through 2015 and (ii) the reversal of a $2.5 million valuation allowance related to tax benefits for foreign losses that are now expected to be realized. These benefits were partially offset by $2.7 million of out-of-period adjustments in income taxes in the third quarter of fiscal 2016.Mexican subsidiary.

Net income attributable to the Company in the first ~~nine~~six months of fiscal ~~2017 increased $46.1~~2019 reflected a $66.7 million, or ~~84.8%~~60.7%, decline from the first ~~nine~~six months of fiscal ~~2016.~~ 2018. Excluding the impact of foreign currency, which negatively impacted net income attributable to the Company in the first ~~nine~~six months of fiscal ~~2017~~2019 by ~~$0.3~~$2.2 million, net income attributable to the Company in the first ~~nine~~six months of fiscal ~~2017~~2019 would have ~~increased by 85.3% versus~~declined 58.7% from the ~~prior year period.~~first six months of fiscal 2018.

~~Earnings per fully diluted share, or~~ EPS in the first ~~nine~~six months of fiscal ~~2017~~2019 was ~~$1.48~~$0.62 compared to ~~$0.83~~$1.57 in the first ~~nine~~six months of fiscal ~~2016. Earnings per fully diluted share in~~2018. EPS for the first ~~nine~~six months of fiscal ~~2017~~2019 included ~~(i)~~ a ~~tax benefit of $0.18 that was offset by $0.01 of~~$0.07 expense ~~both related to the cessation of operations of~~in connection with our ~~Spanish subsidiary; (ii) a $0.01 gain on early extinguishment of debt~~organizational realignment and ~~(iii) a $0.03 net tax benefit related to the reversal of tax reserves resulting from an updated transfer pricing study. Earnings per fully diluted share in~~EPS for the first ~~nine~~six months of fiscal ~~2016~~2018 included ~~(i)~~ a ~~$0.17 net~~$0.25 tax benefit ~~in connection with a research and development credit and a Section 199 deduction for the tax years 2012 through 2015 and (ii) a $0.04 benefit for the reversal~~from Oprah Winfrey’s exercise of a ~~valuation allowance related to tax benefits for foreign losses that are expected to be realized, partially offset by a $0.04 expense for out-of-period tax adjustments.~~ portion of her stock options.

The following tables set forth key metrics by reportable segment for the first ~~nine~~six months of fiscal ~~2017~~2019 and the percentage change in those metrics versus the prior year period:


	First Nine Months Of Fiscal 2017																											First Half of 2019
	GAAP									Constant Currency																		GAAP									Constant Currency
				Product									Product						Total												Product									Product						Total
	Service			Sales &			Total			Service			Sales &			Total			Paid			Incoming			EOP			Service			Sales &			Total			Service			Sales &			Total			Paid			Incoming			EOP
	Revenues			Other			Revenues			Revenues			Other			Revenues			Weeks			Subscribers			Subscribers			Revenues			Other			Revenues			Revenues			Other			Revenues			Weeks			Subscribers			Subscribers
																						(in thousands)																											(in thousands)
North America	$	589.1		$	106.3		$	695.4		$	588.7		$	106.2		$	695.0			91.0			1,719.2			2,200.2		$	436.2		$	69.5		$	505.7		$	437.4		$	69.7		$	507.1			77.0			2,558.5			2,940.7
CE																													131.4			22.1			153.5			141.0			23.7			164.7			29.4			940.2			1,137.6
UK		55.3			20.6			75.9			60.3			22.5			82.9			13.3			265.1			320.7			36.2			13.0			49.1			38.5			13.8			52.2			10.4			333.7			387.0
CE		145.2			34.4			179.6			145.8			34.8			180.6			29.7			564.7			756.7
Other ⁽¹⁾		28.1			15.4			43.5			26.9			15.1			42.0			3.7			72.2			77.9			16.8			7.2			23.9			18.3			7.5			25.8			2.8			100.0			102.8
Total	$	817.7		$	176.7		$	994.4		$	821.7		$	178.7		$	1,000.4			137.7			2,621.1			3,355.5		$	620.5		$	111.7		$	732.2		$	635.2		$	114.7		$	749.9			119.5			3,932.3			4,568.1

	% Change First Nine Months of Fiscal 2017 vs. First Nine Months of Fiscal 2016																											% Change First Half of 2019 vs. First Half of 2018
North America		13.8	%		11.4	%		13.4	%		13.7	%		11.3	%		13.3	%		17.8	%		12.3	%		19.1	%		(8.4	%)		(20.6	%)		(10.3	%)		(8.2	%)		(20.3	%)		(10.0	%)		(1.5	%)		20.9	%		(1.9	%)
CE																													(1.9	%)		(26.7	%)		(6.5	%)		5.3	%		(21.3	%)		0.4	%		11.8	%		30.0	%		11.5	%
UK		(4.1	%)		(8.1	%)		(5.2	%)		4.6	%		0.6	%		3.5	%		6.2	%		0.8	%		6.5	%		(14.8	%)		(23.9	%)		(17.4	%)		(9.4	%)		(19.1	%)		(12.2	%)		0.5	%		12.7	%		0.9	%
CE		14.7	%		(6.6	%)		9.9	%		15.2	%		(5.6	%)		10.5	%		18.9	%		6.4	%		23.8	%
Other ⁽¹⁾		9.3	%		3.2	%		7.0	%		4.4	%		1.2	%		3.2	%		4.9	%		12.2	%		4.5	%		(15.0	%)		(34.5	%)		(21.9	%)		(7.0	%)		(31.5	%)		(15.8	%)		0.8	%		27.8	%		2.0	%
Total		12.3	%		4.2	%		10.8	%		12.9	%		5.4	%		11.5	%		16.4	%		9.7	%		18.4	%		(7.7	%)		(23.3	%)		(10.5	%)		(5.5	%)		(21.2	%)		(8.3	%)		1.7	%		22.4	%		1.5	%

	First Nine Months Of Fiscal 2017																														First Half of 2019
	Meeting Fees						Meeting			Incoming			EOP			Online Subscription Revenues						Online			Incoming			EOP			Digital Subscription Revenues						Digital			Incoming			EOP			Studio + Digital Fees						Studio + Digital			Incoming			EOP
				Constant			Paid			Meeting			Meeting						Constant			Paid			Online			Online						Constant			Paid			Digital			Digital						Constant			Paid			Studio + Digital			Studio + Digital
	GAAP			Currency			Weeks			Subscribers			Subscribers			GAAP			Currency			Weeks			Subscribers			Subscribers			GAAP			Currency			Weeks			Subscribers			Subscribers			GAAP			Currency			Weeks			Subscribers			Subscribers
										(in thousands)															(in thousands)															(in thousands)															(in thousands)
North America	$	376.1		$	375.9			39.7			743.9			924.9		$	213.0		$	212.8			51.3			975.3			1,275.3		$	201.6		$	202.2			50.6			1,648.4			1,995.8		$	234.6		$	235.2			26.4			910.1			944.9
CE																																83.8			89.9			23.1			730.3			914.5			47.6			51.1			6.2			209.9			223.1
UK		39.4			43.1			7.9			154.8			180.3			15.9			17.3			5.4			110.3			140.4			13.4			14.3			5.0			160.1			195.0			22.8			24.2			5.4			173.6			192.0
CE		70.2			70.6			8.6			171.7			206.2			75.0			75.2			21.1			393.0			550.5
Other ⁽¹⁾		19.3			18.3			2.0			31.6			35.6			8.9			8.6			1.7			40.6			42.3			7.0			7.7			1.6			55.3			59.3			9.7			10.6			1.2			44.7			43.4
Total	$	505.0		$	507.8			58.3			1,102.0			1,346.9		$	312.7		$	313.9			79.5			1,519.1			2,008.6		$	305.8		$	314.1			80.3			2,594.0			3,164.7		$	314.7		$	321.2			39.2			1,338.4			1,403.4

	% Change First Nine Months of Fiscal 2017 vs. First Nine Months of Fiscal 2016																														% Change First Half of 2019 vs. First Half of 2018
North America		12.5	%		12.5	%		13.5	%		15.3	%		14.1	%		16.0	%		15.9	%		21.4	%		10.0	%		23.1	%		4.3	%		4.6	%		5.5	%		31.8	%		4.3	%		(17.1	%)		(16.9	%)		(12.7	%)		5.1	%		(12.7	%)
CE																																10.9	%		19.1	%		18.8	%		36.6	%		18.3	%		(18.6	%)		(12.6	%)		(8.3	%)		11.3	%		(9.8	%)
UK		(8.4	%)		(0.0	%)		0.5	%		1.1	%		1.1	%		8.6	%		18.1	%		15.6	%		0.3	%		14.4	%		(0.8	%)		5.4	%		7.8	%		19.2	%		8.4	%		(21.3	%)		(16.4	%)		(5.4	%)		7.3	%		(5.7	%)
CE		1.1	%		1.7	%		1.6	%		(0.4	%)		4.9	%		31.1	%		31.5	%		27.8	%		9.7	%		32.7	%
Other ⁽¹⁾		9.1	%		3.7	%		7.8	%		16.2	%		7.9	%		9.5	%		5.7	%		1.5	%		9.3	%		1.8	%		(2.4	%)		6.8	%		7.9	%		24.9	%		6.9	%		(22.2	%)		(15.0	%)		(7.1	%)		31.6	%		(4.0	%)
Total		8.8	%		9.4	%		9.5	%		10.4	%		10.6	%		18.6	%		19.1	%		22.1	%		9.2	%		24.4	%		5.6	%		8.5	%		9.2	%		32.1	%		8.3	%		(17.8	%)		(16.1	%)		(10.9	%)		7.1	%		(11.1	%)

The ~~increase~~decrease in North America revenues in the first ~~nine~~six months of fiscal ~~2017~~2019 versus the prior year period was ~~primarily~~ driven by both a decrease in Service Revenues and a decrease in product sales and other. This decrease in Service Revenues in the first six months of fiscal 2019 versus the prior year period was driven primarily by the decrease in Studio + Digital Fees, partially offset by an increase in ~~Service~~Digital Subscription Revenues. The ~~increase~~decrease in North America Total Paid Weeks was driven by ~~both~~lower recruitments in the first six months of fiscal 2019 partially offset by the higher number of Incoming Subscribers at the beginning of fiscal ~~2017~~2019 versus the beginning of fiscal ~~2016 and higher~~2018. Lower recruitments ~~primarily in the Online business~~ in the first ~~nine~~six months of fiscal 2019 were driven by cycling against the successful launch of our WW Freestyle program in December 2017 ~~versus~~and by the ~~prior year period.~~impact of ineffective marketing at the start of fiscal 2019.

The ~~increase~~decrease in North America product sales and other in the first ~~nine~~six months of fiscal ~~2017~~2019 versus the prior year period was driven primarily ~~driven~~ by ~~an increase~~a decrease in product ~~sales, partially offset by a decline in licensing revenue.~~sales.

The ~~decline~~decrease in UKContinental Europe revenues in the first ~~nine~~six months of fiscal ~~2017~~2019 versus the prior year period was driven by the ~~negative~~ impact of foreign currency. Excluding ~~the impact of~~ foreign currency, UK revenues in the first six months of fiscal 2019 would have increased driven by an increase in Service Revenues on a constant currency basis. This increase in Service Revenues was the result of recruitment strength in our Online business in the first nine months of fiscal 2017 versus the prior year period.

~~The increase in UK product sales and other in the first nine months of fiscal 2017 versus~~slightly above the prior year period ~~was~~ driven by ~~in meeting and other products sales, almost entirely offset by the decline in licensing revenue.~~

~~The increase in Continental Europe revenues in the first nine months of fiscal 2017 versus the prior year period was primarily driven by the~~an increase in Service Revenues. This increase in Service Revenues in the first ~~nine~~six months of fiscal ~~2017~~2019 versus the prior year period was ~~primarily~~ driven by ~~the~~an increase in ~~Online~~Digital Subscription ~~Revenues.~~Revenues, partially offset by a decrease in Studio + Digital Fees. The increase in Continental Europe Total Paid Weeks was driven primarily by the higher number of Incoming Subscribers at the beginning of fiscal 2019 versus the beginning of fiscal 2018, partially offset by lower recruitments in the first six months of fiscal 2019. Lower recruitments in the first six months were driven by cycling against the successful launch of our new program in December 2017 and by the impact of ineffective marketing at the start of fiscal 2019.

The decrease in Continental Europe product sales and other in the first six months of fiscal 2019 versus the prior year period was driven primarily by a decrease in product sales.

The decrease in UK revenues in the first six months of fiscal 2019 versus the prior year period was driven by both the decrease in Service Revenues and product sales and other. This decrease in Service Revenues in the first six months of fiscal 2019 versus the prior year period was driven primarily by the decrease in Studio + Digital Fees. The increase in UK Total Paid Weeks was driven by the higher number of Incoming Subscribers at the beginning of fiscal ~~2017~~2019 versus the beginning of fiscal ~~2016, improved retention~~2018, partially offset by lower recruitments in the first ~~nine~~six months of fiscal ~~2017 versus the prior year period and recruitment strength in our Online business~~2019. Lower recruitments in the first ~~nine~~six months were driven by cycling against the successful launch of our new program in December 2017 and by the impact of ineffective marketing at the start of fiscal ~~2017 versus the prior year period.~~2019.

The ~~increase~~decrease in ~~Continental Europe revenues was partially offset by the decline in Continental Europe~~UK product sales and other in the first ~~nine~~six months of fiscal ~~2017~~2019 versus the prior year ~~period.~~period was driven primarily by a decrease in product sales and to a lesser extent a decrease in licensing.

The ~~increase~~decrease in Other revenues in the first ~~nine~~six months of fiscal ~~2017~~2019 versus the prior year period was ~~primarily~~ driven by ~~the increase~~both a decrease in Service ~~Revenues.~~Revenues and a decrease in product sales and other. The ~~increase~~decrease in ~~Other Total Paid Weeks~~Service Revenues in the first six months of fiscal 2019 versus the prior year period was driven primarily ~~driven~~ by the ~~higher number of Incoming Subscribers at the beginning of fiscal 2017 versus the beginning of fiscal 2016.~~decrease in Studio + Digital Fees.

The ~~increase~~decrease in Other product sales and other in the first ~~nine~~six months of fiscal ~~2017~~2019 versus the ~~first nine months of fiscal 2016~~prior year period was driven primarily ~~driven~~ by ~~an increase~~a decrease in ~~in-meeting~~both product sales and ~~commissions from our franchisees partially offset by a decline in licensing revenue.~~franchise commissions.

Cash flows provided by operating activities have historically supplied, and are expected to continue to supply, us with our primary source of liquidity. We use these cash flows, supplemented with long-term debt and short-term borrowings, to fund our operations and global strategic initiatives, pay down debt and ~~opportunistically~~ engage in selective acquisitions. We believe that cash generated by operations during fiscal ~~2017,~~2019, our cash on hand of ~~$178.2~~approximately $180.6 million at ~~September 30, 2017~~June 29, 2019, our $148.8 million of availability under our Revolving Credit Facility and our continued cost focus will provide us with sufficient liquidity to meet our obligations for the next twelve months.

As market conditions warrant, we may, from time to time, seek to purchase our outstanding debt securities or loans, including the Notes and borrowings under the Credit Facilities (each as defined below). Such transactions could be privately negotiated or open market transactions, pursuant to tender offers or otherwise. Subject to any applicable limitations contained in the agreements governing, or terms of, our indebtedness, any such purchases made by us may be funded by the use of cash on our balance sheet or the incurrence of new secured or unsecured debt. The amounts involved in any such purchase transactions, individually or in the aggregate, may be material. Any such purchases may equate to a substantial amount of a particular class or series of debt, which may reduce the trading liquidity of such class or series.

We generally operate with negative working capital that is driven in part by our commitment and subscription plans which are our primary payment method. These plans require members and subscribers to pay us for meetings and Online subscription products 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 has resulted in, and in certain circumstances has helped drive, negative working capital. This core characteristic of our business model is expected to continue. However, in a period in which revenue is increasing, we get higher working capital benefit from this deferred revenue.

The following table sets forth certain relevant measures of our balance sheet working capital deficit, excluding cash and cash equivalents and current portion of long-term debt at:

		September 30,			December 31,			Increase/				June 29,			December 29,			Increase/
		2017			2016			(Decrease)				2019			2018			(Decrease)
		(in millions)										(in millions)
Total current assets		$	280.5		$	235.2		$	45.3			$	284.1		$	366.4		$	(82.3	)
Total current liabilities			293.2			292.4			0.8				350.2			341.3			8.9
Working capital deficit			(12.7	)		(57.2	)		(44.5	)
Working capital (deficit) surplus													(66.1	)		25.1			91.2
Cash and cash equivalents			178.2			108.7			69.5				180.6			237.0			(56.3	)
Current portion of long-term debt			31.4			21.0			10.4				57.8			77.0			(19.3	)
Working capital deficit, excluding cash and cash equivalents and current portion of long-term debt	Working capital deficit, excluding cash and cash equivalents and current portion of long-term debt	$	(159.5	)	$	(144.9	)	$	14.6		Working capital deficit, excluding cash and cash equivalents and current portion of long-term debt	$	(189.0	)	$	(134.9	)	$	54.1

The following table sets forth a summary of the primary factors contributing to ~~this $14.6~~the $54.1 million increase in our working capital ~~deficit:~~deficit, excluding cash and cash equivalents and current portion of long-term debt:

September 30,

December 31,

Increase/

Impact to

2017

2016

(Decrease)

Working Capital Deficit

(in millions)

Derivative payable

$
21.1

$
32.0

$
(10.8
)

$
(10.8
)
Operational liabilities and other, net of assets

$
60.4

$
66.8

$
(6.4
)

$
(6.4
)
Deferred revenue

$
82.7

$
62.9

$
19.8

$
19.8

Other current assets

$
23.2

$
30.9

$
(7.7
)

$
7.7

Accrued salaries and wages

$
51.9

$
49.6

$
2.2

$
2.2

Prepaid income taxes

$
33.4

$
35.5

$
(2.1
)

$
2.1

Working capital deficit change

$
14.6

	June 29,		December 29,		Increase/			Impact to Working
	2019		2018		(Decrease)			Capital Deficit
	(in millions)
Portion of operating lease liabilities due within one year	$	32.0	$	-	$	32.0		$	32.0
Prepaid income taxes	$	15.2	$	34.0	$	(18.8	)	$	18.8
Derivative payable, net	$	19.3	$	2.1	$	17.3		$	17.3
Deferred revenue	$	56.9	$	53.5	$	3.4		$	3.4
Accrued interest	$	28.0	$	28.7	$	(0.6	)	$	(0.6	)
Income taxes payable	$	19.7	$	22.6	$	(2.9	)	$	(2.9	)
Operational liabilities and other, net of assets	$	48.2	$	62.0	$	(13.8	)	$	(13.8	)
Working capital deficit change, excluding cash and cash equivalents and current portion of long-term debt								$	54.1

Portion of operating lease liabilities due within one year is due to the adoption of the updated lease accounting guidance. The decrease in prepaid income taxes is primarily related to refunds received. The decrease in operational liabilities and other, net of assets, which includes accrued salaries and wages, was driven primarily ~~driven~~ by the timing of ~~payments and seasonality.~~payments. The increase in deferred revenue was driven primarily by ~~improved business performance.~~seasonality.

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

	September 30, 2017			October 1, 2016			June 29, 2019			June 30, 2018
	(in millions)						(in millions)
Net cash provided by operating activities	$	184.8		$	93.9		$	79.8		$	168.6
Net cash used for investing activities	$	(31.1	)	$	(29.5	)	$	(23.7	)	$	(30.5	)
Net cash used for financing activities	$	(88.4	)	$	(207.1	)	$	(111.9	)	$	(51.4	)

Cash flows provided by operating activities of ~~$184.8~~$79.8 million for the first ~~nine~~six months of fiscal ~~2017~~2019 reflected ~~an increase~~a decrease of ~~$90.9~~$88.8 million from ~~$93.9~~$168.6 million of cash flows ~~used for~~provided by operating activities in the first ~~nine~~six months of fiscal ~~2016.~~2018. The decrease in cash provided by operating activities was primarily the result of a decrease in net income attributable to the Company of $66.7 million in the first six months of fiscal 2019 as compared to the prior year period.

Cash flows provided by operating activities of $168.6 million for the first six months of fiscal 2018 reflected an increase of $70.5 million from $98.1 million of cash flows provided by operating activities in the first six months of fiscal 2017. The increase in cash provided by operating activities was primarily the result of ~~$46.1 million of higher~~an increase in net income ~~as well as~~attributable to the ~~$43.3~~Company of $54.0 million ~~of benefit from the year-over-year change in working capital~~ in the first ~~nine~~six months of fiscal ~~2017~~2018 as compared to the prior year period.

Cash flows provided by operating activities of $93.9 million for the first nine months of fiscal 2016 reflected an increase of $41.0 million from $52.9 million of cash flows provided by operating activities in the first nine months of fiscal 2015. The increase in cash provided by operating activities was primarily the result of $30.1 million of benefit from year-over-year change in working capital in the first nine months of fiscal 2016 as compared to the prior year period.

Net cash used for investing activities totaled ~~$31.1~~$23.7 million in the first ~~nine~~six months of fiscal ~~2017,~~2019, a decrease of ~~$1.6~~$6.8 million as compared to the first ~~nine~~six months of fiscal ~~2016, which included~~2018. This decrease was primarily attributable to lower capital expenditures for technology in the ~~acquisition~~first six months of ~~its franchisee for certain territories in South Florida for $2.9 million.~~fiscal 2019.

Net cash used for investing activities totaled ~~$29.5~~$30.5 million in the first ~~nine~~six months of fiscal ~~2016,~~2018, an increase of ~~$3.3~~$11.4 million as compared to the first ~~nine~~six months of fiscal ~~2015. Our technology and operating infrastructure required less investment~~2017. This increase was due to investments in intellectual properties in the first ~~nine~~six months of fiscal ~~2016 as compared to the first nine months of fiscal 2015.~~2018.

Net cash used for financing activities totaled ~~$88.4~~$111.9 million in the first ~~nine~~six months of fiscal ~~2017,~~2019, primarily due to ~~$73.0~~$50.0 million used for the debt prepayment and ~~other~~$57.8 million used for scheduled debt repayments ~~of $15.4 million in connection with the Tranche B-2~~under our Term ~~Facility in the first nine months of fiscal 2017.~~Loan Facility. See “—Long-Term Debt” for additional details on debt payments.

Net cash used for financing activities totaled ~~$207.1~~$51.4 million in the first ~~nine~~six months of fiscal ~~2016,~~2018, primarily due to ~~a $144.3~~$25.0 million ~~debt repayment in connection with~~of net repayments on the ~~Tranche B-1 Term~~outstanding principal amount on the Revolving Credit Facility and ~~other~~$38.5 million used for the scheduled debt repayments ~~of $15.8~~under our Term Loan Facility, which was partially offset by $23.3 million in ~~connection with the Tranche B-2 Term Facility, as well as the repayment of $48.0 million outstanding under the Revolving Facility, offset by a tax benefit for restricted stock units vested and~~proceeds from stock options ~~exercised of $1.0 million in the first nine months of fiscal 2016.~~exercised.

We currently plan to meet our long-term debt obligations by using cash flows provided by operating activities and opportunistically using other means to repay or refinance our obligations as we determine appropriate.

The following schedule sets forth our long-term debt obligations at ~~September 30, 2017:~~June 29, 2019:

	Balance		Balance
Tranche B-2 Term Facility due April 2, 2020	$	1,930.4
Term Loan Facility due November 29, 2024			$	1,374.5
Notes due December 1, 2025				300.0
Total				1,674.5
Less: Current Portion		31.4		57.8
Unamortized Deferred Financing Costs		14.1		8.5
Unamortized Debt Discount				23.8
Total Long-Term Debt	$	1,884.8	$	1,584.5

~~Our~~On November 29, 2017, we refinanced our then-existing credit facilities (referred to herein as the November 2017 debt refinancing) consisting of $1,930.4 million of borrowings under a term loan facility and an undrawn $50.0 million revolving credit facility with $1,565.0 million of borrowings under our new credit facilities, consisting of a $1,540.0 million term loan facility and a $150.0 million revolving credit facility (of which $25.0 million was drawn upon at the ~~end~~time of the ~~first~~November 2017 debt refinancing) (collectively referred to herein as the Credit Facilities), and $300.0 million in aggregate principal amount of 8.625% Senior Notes due 2025, or the Notes. During the fourth quarter of fiscal ~~2013 consisted~~2017, we incurred fees of $53.8 million (which included $30.8 million of a debt discount) in connection with the ~~following term loan facilities~~November 2017 debt refinancing. In addition, we recorded a loss on early extinguishment of debt of $10.5 million in connection thereto. This early extinguishment of debt write-off was comprised of $5.7 million of deferred financing fees paid in connection with the November 2017 debt refinancing and revolving credit facilities: a tranche B loan, or Term B Loan, a tranche C loan, or Term C Loan, a tranche D loan, or Term D Loan, a tranche E loan, or Term E Loan, a tranche F loan, or Term F Loan, revolving credit facility A-1, or Revolver A-1, and revolving credit facility A-2, or Revolver A-2.$4.8 million of pre-existing deferred financing fees.

~~On April 2, 2013, we refinanced our credit facilities pursuant to~~Senior Secured Credit Facilities

The Credit Facilities were issued under a new ~~Credit Agreement,~~credit agreement, dated November 29, 2017, or ~~as amended, supplemented or otherwise modified,~~ the Credit Agreement, among the Company, as borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., or JPMorgan Chase, as administrative agent and an

As of June 29, 2019, we had $1,374.5 million of debt outstanding under the Credit Facilities with ~~this refinancing. In the second quarter~~$148.8 million of ~~fiscal 2013, we wrote-off fees associated with this refinancing which resulted in our recording a charge of $21.7~~availability and $1.2 million in ~~early extinguishment~~issued but undrawn letters of ~~debt.~~credit outstanding under the Revolving Credit Facility. There was no outstanding balance under the Revolving Credit Facility as of June 29, 2019.

~~On September 26, 2014, we entered into an agreement with certain lenders amending~~

All obligations under the Credit Agreement ~~that, among other things, eliminated~~are guaranteed by, subject to certain exceptions, each of the ~~Financial Covenant (as defined in~~Company’s current and future wholly-owned material domestic restricted subsidiaries. All obligations under the Credit ~~Agreement) with respect to~~Agreement, and the ~~Revolving Facility. In connection with this amendment, we wrote-off deferred financing fees~~guarantees of ~~approximately $1.6 million in the third quarter of fiscal 2014. Concurrently with and in order to effect this amendment, we reduced the amount~~those obligations, are secured by substantially all of the ~~Revolving Facility from $250.0 million~~assets of the Company and each guarantor, subject to ~~$50.0 million.~~customary exceptions, including:

Under the terms of the Credit Agreement, depending on our Consolidated First Lien Net Debt Leverage Ratio (as ~~defined~~used in the Credit Agreement), on an annual basis on or about the time we are required to deliver our financial statements for any fiscal year, we are obligated to offer to prepay a portion of the outstanding principal amount of the Term ~~Facilities~~Loan Facility in an aggregate amount determined by a percentage of our annual excess cash flow (as defined in the Credit Agreement) (said payment referred to herein as a Cash Flow Sweep).

Borrowings under the Term Loan Facility bear interest at a rate per annum equal to, at our option, either (1) an applicable margin plus a base rate determined by reference to the highest of (a) 0.50% per annum plus the higher of (i) the Federal Funds Effective Rate and (ii) the Overnight Bank Funding Rate as determined by the Federal Reserve Bank of New York, (b) the prime rate of JPMorgan Chase and (c) the LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00%; provided that such rate is not lower than a floor of 1.75% or (2) an applicable margin plus a LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, provided that LIBOR is not lower than a floor of 0.75%. Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to an applicable margin based upon a leverage-based pricing grid, plus, at our option, either (1) a base rate determined by reference to the highest of (a) 0.50% per annum plus the higher of (i) the Federal Funds Effective Rate and (ii) the Overnight Bank Funding Rate as determined by the Federal Reserve Bank of New York, (b) the prime rate of JPMorgan Chase and (c) the LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00% or (2) a LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs. As of June 29, 2019, the applicable margins for the LIBOR rate borrowings under the Term Loan Facility and the Revolving Credit Facility were 4.75% and 2.25%, respectively. In the event that LIBOR is phased out as is currently expected, the Credit Agreement provides that the Company and the administrative agent may amend the Credit Agreement to replace the LIBOR definition therein with a successor rate subject to notifying the lending syndicate of such change and not receiving within five business days of such notification objections to such replacement rate from lenders holding at least a majority of the aggregate principal amount of loans and commitments then outstanding under the Credit Agreement. If we fail to do so, our borrowings will be based off of the alternative base rate plus a margin.

On ~~March 13, 2015,~~a quarterly basis, we ~~commenced~~pay a commitment fee to the lenders under the Revolving Credit Facility in respect of unutilized commitments thereunder, which commitment fee fluctuates depending upon our Consolidated First Lien Net Debt Leverage Ratio. Based on our Consolidated First Lien Net Debt Leverage Ratio as of June 29, 2019, the commitment fee was 0.35% per annum. Our Consolidated First Lien Net Debt Leverage Ratio as of June 29, 2019 was 2.93:1.00.

The Credit Agreement contains other customary terms, including (1) representations, warranties and affirmative covenants, (2) negative covenants, including limitations on indebtedness, liens, mergers, acquisitions, asset sales, investments, distributions,

prepayments of subordinated debt, amendments of material agreements governing subordinated indebtedness, changes to lines of business and transactions with affiliates, in each case subject to baskets, thresholds and other exceptions, and (3) customary events of default.

As of June 29, 2019, we were in compliance with all applicable financial covenants in the Credit Agreement governing the Credit Facilities.

The Notes were issued pursuant to an Indenture, dated as of November 29, 2017, or the Indenture, among the Company, the guarantors named therein and The Bank of New York Mellon, as trustee. The Indenture contains customary covenants, events of default and other provisions for an issuer of non-investment grade debt securities. These covenants include limitations on indebtedness, liens, mergers, acquisitions, asset sales, investments, distributions, prepayments of subordinated debt and transactions with affiliates, in each case subject to baskets, thresholds and other exceptions.

The Notes accrue interest at a rate per annum equal to 8.625% and are due on December 1, 2025. Interest on the Notes is payable semi-annually on June 1 and December 1 of each year, beginning on June 1, 2018. On or after December 1, 2020, the Company may on any one or more occasions redeem some or all of the Notes at a purchase price equal to 104.313% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, but not including, the redemption date, such optional redemption price decreasing to 102.156% on or after December 1, 2021 and to 100.000% on or after December 1, 2022. Prior to December 1, 2020, the Company may on any one or more occasions redeem up to 40% of the aggregate principal amount of the Notes with an amount not to exceed the net proceeds of certain equity offerings at 108.625% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the redemption date. Prior to December 1, 2020, the Company may redeem some or all of the Notes at a make-whole price plus accrued and unpaid interest, if any, to, but not including, the redemption date. If a change of control occurs, the Company must offer to ~~prepay~~purchase for cash the Notes at a ~~discount~~purchase price equal to ~~par up~~101% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, ~~$75.0~~but not including, the purchase date. Following the sale of certain assets and subject to certain conditions, the Company must offer to purchase for cash the Notes at a purchase price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, but not including, the purchase date. The Notes are guaranteed on a senior unsecured basis by the Company’s subsidiaries that guarantee the Credit Facilities.

At June 29, 2019, we had $1,674.5 million outstanding under the Credit Facilities and the Notes, consisting of the Term Loan Facility of $1,374.5 million, $0.0 million drawn down on the Revolving Credit Facility and $300.0 million in aggregate principal amount of term loans outstanding under the Tranche B-1 Term Facility. On March 20, 2015, we accepted offers with a discount equal to or greater than 9.00% in respect of such term loans. On March 25, 2015, we paid an aggregate amount of cash proceeds totaling $57.4 million plus an amount sufficient to pay accruedNotes issued and unpaid interest on the amount prepaid to prepay $63.1 million in aggregate principal amount of such term loans under the Tranche B-1 Term Facility. This expenditure reduced, on a dollar for dollar basis, our $59.7 million obligation to make a mandatory excess cash flow prepayment offer to the term loan lenders under the terms of the Credit Agreement. In addition, we made a voluntary prepayment at par on March 25, 2015 of $2.5 million in respect of such term loans under the Tranche B-1 Term Facility to reduce the remaining excess cash flow prepayment obligation for fiscal 2014. As a result of this prepayment, we wrote-off fees of $0.3 million, incurred fees of $0.6 million and recorded a gain on early extinguishment of debt of $4.7 million, inclusive of these fees, in the first quarter of fiscal 2015.

On June 17, 2015, we commenced another offer to prepay at a discount to par up to $229.0 million in aggregate principal amount of term loans outstanding under the Tranche B-1 Term Facility. On June 22, 2015, we accepted offers with a discount equal to or greater than 9.00% in respect of such term loans. On June 26, 2015, we paid an aggregate amount of cash proceeds totaling $77.2 million plus an amount sufficient to pay accrued and unpaid interest on the amount prepaid to prepay $84.9 million in aggregate principal amount of such term loans under the Tranche B-1 Term Facility. As a result of this prepayment, we wrote-off fees of $0.3 million, incurred fees of $0.6 million and recorded a gain on early extinguishment of debt of $6.7 million, inclusive of these fees, in the second quarter of fiscal 2015.

On July 14, 2015, we drew down the $48.0 million available on our Revolving Facility in order to enhance our cash position and to provide additional financial flexibility. As of January 2, 2016, the revolver borrowing was classified as a short-term liability in consideration of the fact that the terms of the Revolving Facility require an assessment as to whether there have been any material adverse changes with respect to the Company in connection with our monthly interest elections. Although the revolver borrowing had classified as a short-term liability as of January 2, 2016, absent any change in fact and circumstance, we had, and continue to have, the ability to extend and not repay the Revolving Facility until its due date of April 2, 2018.

On April 1, 2016, we paid in full, with cash on hand, a principal amount of term loans equal to $144.3 million, which constituted the entire remaining principal amount of term loans outstanding under the Tranche B-1 Term Facility due April 2, 2016.

On July 29, 2016, we paid down, with cash on hand, a principal amount of $25.0 million of the $48.0 million outstanding under the Revolving Facility. On September 16, 2016, we paid down, with cash on hand, the remaining outstanding principal amount of $23.0 million on the Revolving Facility.

~~On May 18, 2017, we commenced another offer to prepay at a discount to par up to $75.0 million in aggregate principal amount of term loans outstanding under the Tranche B-2 Term Facility.~~ ~~On May 24, 2017, we accepted offers with a discount equal to or greater than 3.28% in respect of such term loans. On May 25, 2017,~~ ~~we paid an aggregate amount of cash proceeds totaling~~ $73.0 million plus an amount sufficient to pay accrued and unpaid interest on the amount prepaid to prepay $75.5 million in aggregate principal amount of such term loans under the Tranche B-2 Term Facility. As a result of this prepayment, we wrote-off fees of $0.6 million, incurred fees of $0.3 million and recorded a gain on early extinguishment of debt of $1.6 million, inclusive of these fees, in the second quarter of fiscal 2017.outstanding.

At September 30, 2017, under the WWI Credit Facility, we had $1,930.4 million outstanding consisting entirely of a term loan under the Tranche B-2 Term Facility. At September 30, 2017, the Revolving Facility had $0 outstanding, $2.2 million in issued but undrawn letters of credit outstanding thereunder and $47.8 million in available unused commitments thereunder. The proceeds from borrowings under the Revolving Facility (including swing line loans and letters of credit) are available to be used for working capital and general corporate purposes. At September 30, 2017June 29, 2019 and December ~~31, 2016,~~ 29, 2018, our debt consisted ~~entirely~~ of both fixed and variable-rate instruments. ~~An interest~~Interest rate ~~swap was~~swaps were entered into to hedge a portion of the cash flow exposure associated with our variable-rate borrowings. Further information regarding our interest rate swaps can be found in Part I, Item 1 of this Quarterly Report on Form 10-Q under Note 12 “Derivative Instruments and Hedging” in the Notes to the Consolidated Financial Statements. The weighted average interest rate (which includes amortization of deferred financing ~~costs)~~costs and debt discount) on our outstanding debt, exclusive of the impact of the swap in effect, was approximately ~~4.68%~~8.17% and ~~4.41%~~7.73% per annum at ~~September 30, 2017~~June 29, 2019 and December ~~31, 2016,~~29, 2018, respectively, based on interest rates on ~~the applicable~~these dates. The weighted average interest rate (which includes amortization of deferred financing ~~costs)~~costs and debt discount) on our outstanding debt, including the impact of the swap in effect, was approximately ~~5.19%~~7.61% and ~~5.32%~~7.46% per annum at ~~September 30, 2017~~June 29, 2019 and December ~~31, 2016,~~29, 2018, respectively, based on interest rates on ~~the applicable~~these dates.

At September 30, 2017, in accordance with the terms of the Credit Agreement, it is probable that we will have a Cash Flow Sweep obligation of approximately $11.2 million to the term loan lenders in the second quarter of fiscal 2018.43

Borrowings under the Credit Agreement bear interest at a rate equal to, at our option, LIBOR plus an applicable margin or a base rate plus an applicable margin. 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%. Under the terms of the Credit Agreement, in the event we receive a corporate rating of BB- (or lower) from S&P and a corporate rating of Ba3 (or lower) from Moody’s, the applicable margin relating to the Term Facilities would increase by 25 basis points. On February 21, 2014, both S&P and Moody’s issued revised corporate ratings of the Company of B+ and B1, respectively. As a result, effective February 21, 2014, the applicable margin on borrowings under the Tranche B-1 Term Facility went from 2.75% to 3.00% and on borrowings under the Tranche B-2 Term Facility went from 3.00% to 3.25%. The applicable margin relating to the Revolving Facility will fluctuate depending upon our Consolidated Leverage Ratio. At April 1, 2016, the date of payment of the principal amount of loans outstanding under the Tranche B-1 Term Facility discussed above, borrowings under the Tranche B-1 Term Facility bore interest at LIBOR plus an applicable margin of 3.00%. At September 30, 2017, borrowings under the Tranche B-2 Term Facility bore interest at LIBOR plus an applicable margin of 3.25%. Based on our Consolidated Leverage Ratio as of September 30, 2017, had there been any borrowings under the Revolving Facility, it would have borne interest at LIBOR plus an applicable margin of 2.50%. On a quarterly basis, we will pay a commitment fee to the lenders under the Revolving Facility in respect of unutilized commitments thereunder, which commitment fee will fluctuate, but in no event exceed 0.50% per annum, depending upon our Consolidated Leverage Ratio. At our Consolidated Leverage Ratio of 5:49:1.00 as of September 30, 2017, the commitment fee was 0.50% per annum. We also will pay customary letter of credit fees and fronting fees under the Revolving Facility.

The Credit 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 Facility does not require us to meet any financial maintenance covenants and is guaranteed by certain of our existing and future subsidiaries. Substantially all of our assets secure the WWI Credit Facility.

The following schedule sets forth our year-by-year debt obligations at ~~September 30, 2017:~~June 29, 2019:

Our accumulated other comprehensive loss includes changes in the fair value of derivative instruments and the effects of foreign currency translations. At ~~September~~June 29, 2019 and June 30, ~~2017 and October 1, 2016,~~2018, the cumulative balance of changes in fair value of derivative instruments, net of taxes, was a loss of ~~$10.8~~$14.7 million and ~~$29.3~~a gain of $2.6 million, respectively. At ~~September~~June 29, 2019 and June 30, ~~2017 and October 1, 2016,~~2018, the cumulative balance of the effects of foreign currency translations, net of taxes, was a loss of ~~$4.0~~$12.0 million and ~~$8.3~~$11.4 million, respectively.

We do not currently pay a ~~cash dividend.~~ dividend and we have no current plans to pay dividends in the foreseeable future. Any future determination to declare and pay dividends will be made at the sole discretion of our Board of Directors, after taking into account our financial condition and results of operations, capital requirements, contractual, legal, tax and regulatory restrictions, the provisions of Virginia law affecting the payment of distributions to shareholders and such other factors itour Board of Directors may deem relevant. ~~The WWI Credit Facility also contains restrictions on~~In addition, our ability to pay dividends onmay be limited by covenants in our ~~common stock.~~existing indebtedness, including the Credit Facilities and the Indenture governing the Notes, and may be limited by the agreements governing other indebtedness we or our subsidiaries incur in the future.

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~~ $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 and its parents and subsidiaries under this program. The repurchase program currently has no expiration date. During the ~~nine~~three months ended ~~September~~June 29, 2019 and June 30, ~~2017 and October 1, 2016,~~2018, we repurchased no shares of our common stock in the open market under this program.

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 Credit Agreement. However, payment of extraordinary dividends and stock repurchases shall not exceed $100.0 million in the aggregate in any fiscal year if our Consolidated Leverage Ratio is greater than 3.25:1. As of September 30, 2017, our Consolidated Leverage Ratio was greater than 3.25:1 and we expect that it will remain above 3.25:1 for the foreseeable future.

We define EBITDAS, a non-GAAP financial measure, as earnings before interest, taxes, depreciation, amortization and stock-based compensation. The table below sets forth the calculations for EBITDAS for the three and ~~nine~~six months ended ~~September~~June 29, 2019 and June 30, ~~2017~~2018, and ~~October 1, 2016, and~~EBITDAS for the trailing twelve months ended ~~September 30, 2017:~~June 29, 2019:

Reducing leverage is a ~~clear~~ capital structure priority for the Company. As ~~part~~ of our commitment to deleveraging, we are targeting a year end 2018 net debt/EBITDAS ratio of less than 4.5x, based on improved operating performance and cash generation. As of September 30, 2017 our trailing twelve months EBITDAS was $328.3 million andJune 29, 2019, our net debt/EBITDAS ratio was ~~5.3x.~~

3.7x. The table below sets forth the calculation for net debt, a non-GAAP financial measure:

We present EBITDAS and net debt/EBITDAS because we consider them to be useful supplemental measures of our performance. In addition, we believe EBITDAS and net debt/EBITDAS are useful to investors, analysts and rating agencies in measuring the ability of a company to meet its debt service obligations. See ~~“Non-GAAP~~“—Non-GAAP Financial Measures” herein for an explanation of our use of these non-GAAP financial measures.

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

Our business is seasonal due to the importance of the winter season to our overall member recruitment environment. ~~Our advertising schedule generally supports~~Historically, we experience our highest level of recruitment during the ~~three key recruitment-generating seasons~~first quarter of the ~~year: winter, spring and fall,~~year, which is supported with ~~winter having~~ the highest concentration of advertising spending. Therefore, our number of End of Period Subscribers in the first quarter of the year is typically higher than the number in other quarters of the year, historically reflecting a decline over the course of the year.

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 corporate website at ~~www.weightwatchersinternational.com~~corporate.ww.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)., or the SEC. Moreover, we also make available at that site the Section 16 reports filed electronically by our officers, directors and 10 percent shareholders. ~~Usually these are publicly accessible no later than the business day following the filing.~~

We use our corporate website at ~~www.weightwatchersinternational.com~~,corporate.ww.com and our corporate Facebook page ~~(www.facebook.com/weightwatchers) and~~(www.facebook.com/WW), Instagram account (Instagram.com/~~weightwatchers)~~WW) and Twitter account (@ww_us) as channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, ~~Securities and Exchange Commission~~SEC filings and public conference calls and webcasts. The contents of our website and social media channels shall not be deemed to be incorporated herein by reference.

As of ~~September 30, 2017,~~June 29, 2019, 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 ~~2016~~2018 have not materially changed from December ~~31, 2016.~~29, 2018.

At the end of the ~~third~~second quarter of fiscal ~~2017,~~ 2019, borrowings under the ~~Tranche B-2 Term Facility~~Credit Facilities bore interest at LIBOR plus an applicable margin of ~~3.25%~~4.75%. For the ~~Tranche B-2~~ Term Loan Facility, the minimum interest rate for LIBOR applicable to such facility pursuant to the terms of the Credit Agreement is set at 0.75%, referred to herein as the ~~B-2~~ LIBOR Floor. In addition, ~~at the end~~as of ~~the third quarter of fiscal 2017,~~June 29, 2019, our interest rate swap in effect had a notional amount of ~~$1.25~~$1.00 billion. Accordingly, as of ~~the end of the third quarter of fiscal 2017,~~June 29, 2019, based on the amount of variable rate debt outstanding and the then-current LIBOR rate, after giving consideration to the impact of the interest rate swap and the ~~B-2~~ LIBOR Floor, a hypothetical 50100 basis point increase in interest rates would have increased annual interest expense by approximately ~~$3.4~~$3.7 million and a hypothetical 50100 basis point decrease in interest rates would have decreased annual interest expense by approximately ~~$4.0~~$3.7 million. ~~This increase is~~These changes are driven primarily ~~driven~~ by the interest rate applicable to our ~~Tranche B-2~~ Term ~~Facility. This decrease is primarily driven by~~ Loan Facility and the lower outstanding debt balance ~~resulting from our Tranche B-2 Term Facility prepayment~~as of ~~$73.0 million~~June 29, 2019 as ~~well as the principal payments during the first and second quarters of fiscal 2017.~~compared to December 29, 2018.

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~~SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our 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 our principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of ~~September 30, 2017,~~June 29, 2019, the end of the ~~third~~second quarter of fiscal ~~2017.~~2019. Based upon that evaluation and subject to the foregoing, our principal executive officer and our principal financial officer concluded that, as of the end of the ~~third~~second quarter of fiscal ~~2017,~~2019, the design and operation of our disclosure controls and procedures were effective at the reasonable assurance level.

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

~~Raymond Roberts v. Weight Watchers International, Inc.~~Securities Class Action and Derivative Matters

~~On January 7, 2016, an OnlinePlus~~ ~~member filed a putative~~In March 2019, two substantially identical class action ~~complaint~~complaints alleging violations of the federal securities laws were filed by individual shareholders against the Company, ~~in the Supreme Court of New York, New York County, asserting class claims for breach of contract and violations~~certain of the ~~New York General Business Law. On February 5, 2016,~~Company’s current officers and the ~~Company removed the case to~~Company’s former controlling shareholder, Artal, in the United States District Court for the Southern District of New York. The actions were consolidated and lead plaintiffs were appointed in June 2019. A consolidated amended complaint was filed on July 29, 2019, naming as defendants the Company, certain of the Company’s current officers and directors, and Artal and certain of its affiliates. The consolidated complaint asserts claims on behalf of all purchasers of the Company’s common stock between May 4, 2018 and February 26, 2019, inclusive, or the Class Period, including purchasers of the Company’s common stock traceable to the May 2018 secondary offering of the Company’s common stock by certain of its shareholders. The complaint alleges that, during the Class Period, the defendants disseminated materially false and misleading statements and/or concealed or recklessly disregarded material adverse facts. The complaint alleges claims under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 thereunder, and with respect to the secondary offering, under Sections 11, 12(a)(2), and 15 of the Securities Act. The plaintiffs seek to recover unspecified damages on behalf of the class members. The Company believes that the action is without merit and intends to vigorously defend it.

There have been no material changes in the risk factors from those detailed in our Annual Report on Form 10-K for fiscal ~~2016 other than as set forth below.~~

~~We are undergoing a chief executive officer transition, which could cause disruption to our business.~~

~~In September 2016, James R. Chambers resigned as President and Chief Executive Officer and as a director of the Company. Thereafter, a search was commenced for Mr. Chambers’ successor.~~ ~~Effective July 5, 2017, Mindy Grossman was appointed President and Chief Executive Officer and as a director of the Company.~~2018.

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.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	WW	The Nasdaq Stock Market LLC

Large accelerated filer	☐☒	Accelerated filer	☒☐

Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐

		Emerging growth company	☐

			Page No.

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	2

	Unaudited Consolidated Balance Sheets at ~~September 30, 2017~~June 29, 2019 and December ~~31, 2016~~29, 2018	2

	Unaudited Consolidated Statements of Net Income for the three and ~~nine~~six months ended ~~September~~June 29, 2019 and June 30, ~~2017 and October 1, 2016~~2018	3

	Unaudited Consolidated Statements of Comprehensive Income for the three and ~~nine~~six months ended ~~September~~June 29, 2019 and June 30, ~~2017 and October 1, 2016~~2018	4

	Unaudited Consolidated Statements of Changes in Total Deficit for the three and six months ended June 29, 2019 and June 30, 2018	5

	Unaudited Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 29, 2019 and June 30, ~~2017 and October 1, 2016~~2018	57

	Notes to Unaudited Consolidated Financial Statements	68

Cautionary Notice Regarding Forward-Looking Statements		2126

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2227

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4145

Item 4.	Controls and Procedures	4246

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	4347

Item 1A.	Risk Factors	4347

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4347

Item 3.	Defaults Upon Senior Securities	4347

Item 4.	Mine Safety Disclosures	4347

Item 5.	Other Information	4347

Item 6.	Exhibits	4448

Signatures		45

			49

	Three Months Ended		Six Months Ended
	June 29,		June 29,
	2019		2019
Operating lease cost	$	12,363	$	25,735
Finance lease cost:
Amortization of leased assets		138		218
Interest on lease liabilities		5		13
Total finance lease cost	$	143	$	231
Total lease cost	$	12,506	$	25,966

	Operating Leases		Finance Leases		Total
Remainder of fiscal 2019	$	20,478	$	286	$	20,764
2020		39,951		135		40,086
2021		31,371		49		31,420
2022		21,254		20		21,274
2023		15,512		21		15,533
Thereafter		74,253		4		74,257
Total lease payments	$	202,819	$	515	$	203,334
Less imputed interest		49,498		76		49,574
Present value of lease liabilities	$	153,321	$	439	$	153,760

	June 29, 2019
Assets:
Operating lease assets	$	144,913
Finance lease assets		522
Total leased assets	$	145,435

Liabilities:
Current
Operating	$	32,003
Finance		287
Noncurrent
Operating	$	121,318
Finance		152
Total lease liabilities	$	153,760

	June 29, 2019
Weighted Average Remaining Lease Term (years)
Operating leases		7.22
Finance leases		1.66

Weighted Average Discount Rate
Operating leases		7.04
Finance leases		4.33

2019	$	63,261
2020		38,491
2021		22,341
2022		14,017
2023		9,192
2024 and thereafter		37,704
Total	$	185,006

	Three Months Ended June 29, 2019
	North		Continental		United
	America		Europe		Kingdom		Other		Total
Digital Subscription Revenues	$	102,851	$	43,586	$	6,993	$	3,539	$	156,969
Studio + Digital Fees		116,958		23,681		11,498		4,662		156,799
Service Revenues, net	$	219,809	$	67,267	$	18,491	$	8,201	$	313,768
Product sales and other, net		35,835		10,062		6,034		3,324		55,255
Revenues, net	$	255,644	$	77,329	$	24,525	$	11,525	$	369,023

	Deferred		Deferred
	Revenue		Revenue-Long Term
Balance as of December 29, 2018	$	53,501	$	961
Net increase (decrease) during the period		3,422		(492	)
Balance as of June 29, 2019	$	56,923	$	469

	June 29, 2019				December 29, 2018
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Capitalized software costs	$	129,091	$	108,034	$	121,508	$	102,659
Website development costs		113,882		86,710		105,710		77,825
Trademarks		11,756		11,116		11,620		11,010
Other		14,021		4,399		13,967		4,149
Trademarks and other intangible assets	$	268,750	$	210,259	$	252,805	$	195,643
Franchise rights acquired		8,120		4,452		8,110		4,319
Total finite-lived intangible assets	$	276,870	$	214,711	$	260,915	$	199,962

	September 30, 2017				December 31, 2016
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Capitalized software costs	$	133,255	$	114,806	$	126,737	$	101,316
Website development costs		132,927		103,295		119,971		87,736
Trademarks		11,220		10,792		11,092		10,647
Other		8,066		7,746		7,945		7,434
Trademarks and other intangible assets	$	285,468	$	236,639	$	265,745	$	207,133
Franchise rights acquired		4,593		4,593		4,551		4,551
Total finite-lived intangible assets	$	290,061	$	241,232	$	270,296	$	211,684

Remainder of fiscal 2017	$	8,806
Fiscal 2018	$	23,263
Fiscal 2019	$	12,166
Fiscal 2020	$	3,926
Fiscal 2021 and thereafter	$	668

Remainder of fiscal 2019	$	12,273
Fiscal 2020	$	22,175
Fiscal 2021	$	13,046
Fiscal 2022	$	3,533
Fiscal 2023 and thereafter	$	11,132

			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 liability at September 30, 2017	$	21,129	$	0	$	21,129	$	0
Interest rate swap liability at December 31, 2016	$	31,974	$	0	$	31,974	$	0

	Nine Months Ended September 30, 2017
	Loss on Qualifying Hedges			Loss on Foreign Currency Translation			Total
Beginning Balance at December 31, 2016	$	(16,002	)	$	(11,118	)	$	(27,120	)
Other comprehensive (loss) income before reclassifications, net of tax		(2,498	)		6,358			3,860
Amounts reclassified from accumulated other comprehensive loss, net of tax^(b)		7,672			787			8,459
Net current period other comprehensive income including noncontrolling interest		5,174			7,145			12,319
Less: net current period other comprehensive income attributable to the noncontrolling interest		0			(72	)		(72	)
Ending Balance at September 30, 2017	$	(10,828	)	$	(4,045	)	$	(14,873	)

	Nine Months Ended October 1, 2016
	Loss on Qualifying Hedges			Loss on Foreign Currency Translation			Total
Beginning Balance at January 2, 2016	$	(23,135	)	$	(14,130	)	$	(37,265	)
Other comprehensive (loss) income before reclassifications, net of tax		(17,440	)		6,232			(11,208	)
Amounts reclassified from accumulated other comprehensive loss, net of tax^(b)		11,319			0			11,319
Net current period other comprehensive (loss) income including noncontrolling interest		(6,121	)		6,232			111
Less: net current period other comprehensive income attributable to the noncontrolling interest		0			(450	)		(450	)
Ending Balance at October 1, 2016	$	(29,256	)	$	(8,348	)	$	(37,604	)

	Three Months Ended				Six Months Ended				Trailing Twelve
	June 29, 2019		June 30, 2018		June 29, 2019		June 30, 2018		Months
Net Income	$	53.8	$	70.7	$	43.1	$	109.8	$	157.1
Interest		34.7		35.9		69.9		71.7		140.5
Taxes		16.6		19.8		13.7		7.2		27.0
Depreciation and Amortization		11.3		10.6		22.7		21.8		45.0
Stock-based Compensation		4.9		5.3		9.7		9.7		20.2
EBITDAS	$	121.3	$	142.3	$	159.2	$	220.2	$	389.8

	June 29, 2019
Total debt	$	1,674.5
Less: Unamortized deferred financing costs		8.5
Less: Unamortized debt discount		23.8
Less: Cash on hand		180.6
Net debt	$	1,461.6

Exhibit Number		Description

†*Exhibit 10.1		Separation Agreement, dated as of May 30, 2019, by and between Stacey Mowbray and Weight Watchers International, Inc.
*Exhibit 31.1		Rule 13a-14(a) Certification by Mindy Grossman, Chief Executive ~~Officer.~~Officer.

*Exhibit 31.2		Rule 13a-14(a) Certification by Nicholas P. Hotchkin, Chief Financial ~~Officer.~~Officer.

*Exhibit 32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002.

*Exhibit 101

*EX-101.INS		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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
*Exhibit 104		The cover page from Weight Watchers International, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 29, 2019, formatted in Inline XBRL (included within the Exhibit 101 attachments).


	WEIGHT WATCHERS INTERNATIONAL, INC.

Date: ~~November~~August 7, ~~2017~~2019	By:	/s/ Mindy Grossman
		Mindy Grossman
		President, Chief Executive Officer and Director (Principal Executive Officer)


Date: ~~November~~August 7, ~~2017~~2019	By:	/s/ Nicholas P. Hotchkin
		Nicholas P. Hotchkin
		Chief Financial Officer, Operating Officer, North America and President, Emerging Markets (Principal Financial ~~and Accounting~~ Officer)