(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 every Interactive Data File required to be submitted 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 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 ~~28, 2021~~27, 2022 was ~~70,021,024.~~70,526,717.

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

A lease is defined as an arrangement that contractually specifies the right to use and control an identified asset for a specific period of time in exchange for consideration. Operating leases are included in operating lease assets, portion of operating lease liabilities due within one year, and long-term operating lease liabilities in the Company’s consolidated balance sheets. Finance leases are included in property and equipment, net, other accrued liabilities, and other long-term liabilities in the Company’s consolidated balance sheets. 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, since the Company’s lessors do not provide an implicit rate, nor is one readily available. The incremental borrowing rate is calculated based on the Company’s credit yield curve and adjusted for collateralization, credit quality and economic environment impact, all where applicable. 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 may include an option to 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 material impact on the terms of the leases and that are also reasonably expected to be exercised as of October 2, 2021. 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 the implementation of the lease accounting standard, or lease commencement date for new leases, with the impact of future changes in the index or rate being recorded as a period expense. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

~~The Company’s operating leases are primarily for its studios and corporate offices.~~

At October ~~2, 2021~~1, 2022 and January ~~2, 2021,~~1, 2022, the Company’s lease assets and lease liabilities, primarily for its studios and corporate offices, were as follows:

For the three and nine months ended October 1, 2022 and October 2, 2021, ~~and September 26, 2020,~~ the components of the Company’s lease expense were as follows:

In conjunction with the continued rationalization of its real estate portfolio, the Company has decided to enter into a sublease, which resulted in a lease asset impairment charge of $1,828 that was recognized in general and administrative expenses in the Company's consolidated statements of net income for the three and nine months ended October 1, 2022. The Company expects to begin recording sublease income as of the sublease commencement date in the fourth quarter of fiscal 2022 as an offset to general and administrative expenses.

The Company’s leases have remaining lease terms of 0 to 1110 years with a weighted average lease term of ~~7.31~~6.99 years as of October ~~2, 2021.~~1, 2022.

Supplemental cash flow information related to leases for the nine months ended October 1, 2022 and October 2, 2021 ~~and September 26, 2020~~ were as follows:

Revenues are recognized when control of the 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.

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 months ended October ~~2, 2021,~~1, 2022, the change in the carrying value of franchise rights acquired was due to the ~~franchisee acquisitions~~impairments of the United States, Canada and New Zealand units of account as ~~described in Note 5 and~~discussed below, the effect of exchange rate ~~changes.~~changes and the Northern Ireland franchisee acquisition as described in Note 5.

Goodwill primarily relates to the acquisition of the Company by The Kraft Heinz Company (successor to H.J. Heinz Company) in 1978, and the Company’s acquisitions of WW.com, LLC (formerly known as WW.com, Inc. and WeightWatchers.com, Inc.) in 2005 and the Company’s franchised territories. See Note 5 for additional information about acquisitions by the Company. For the nine months ended October ~~2, 2021,~~1, 2022, the change in the carrying amount of goodwill was due to the ~~Maine Acquisition~~Republic of Ireland franchisee and Northern Ireland franchisee acquisitions as described in Note 5, the impairment of the Company's wholly-owned subsidiary Kurbo, Inc. (“Kurbo”) as discussed below and the effect of exchange rate changes as follows:

Finite-lived franchise rights acquired are amortized over the remaining contractual period, which is generally less than one ~~year.~~year. Indefinite-lived franchise rights acquired are tested for potential impairment on at least an annual basis ~~for impairment.~~or more often if events so require.

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 Workshops + Digital business and a relief from royalty methodology for franchise rights related to the Company’s 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 Workshops + Digital business and the Digital business in the country in which the applicable acquisition occurred. The net book values of these franchise rights in the United States, Canada, United Kingdom, Australia and New Zealand as of the October ~~2, 2021~~1, 2022 balance sheet date were ~~$698,383, $60,064, $12,204, $6,528~~$400,092, $19,342, $10,061, $5,753 and ~~$4,911,~~$2,141, respectively.

In its hypothetical start-up approach analysis for fiscal ~~2021,~~2022, 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 Workshops + Digital business in each country based on assumptions regarding revenue growth and operating income margins. ~~The~~In the Company’s relief from royalty approach analysis for fiscal 2022, the cash flows associated with the Digital business in each country were based on the expected Digital revenue for such country and the application of a royalty rate based on current market terms. The cash flows for the Workshops + Digital and the Digital businesses were discounted utilizing rates which were calculated using the weighted-average cost of capital, which included the cost of equity and the cost of debt.

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 unit. The Company has determined the appropriate reporting unit for purposes of assessing annual impairment to be the country for all reporting units. The net book values of goodwill in the United States, Canada and other countries as of the October ~~2, 2021~~1, 2022 balance sheet date were ~~$105,121, $42,371~~$104,019, $38,759 and ~~$10,037,~~$13,377, respectively.

For all of the Company’s reporting units tested as of May ~~9, 2021,~~8, 2022, the Company estimated future cash flows by utilizing the historical debt-free cash flows (cash flows provided by operations 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 weighted-average cost of capital, which included the cost of equity and the cost of debt.

The Company reviews indefinite-lived intangible assets, including franchise rights acquired with indefinite lives, and goodwill 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 ~~9, 2021~~8, 2022 and May ~~3, 2020,~~9, 2021, each the first day of fiscal May, on its indefinite-lived intangible assets and goodwill.

In performing its annual impairment analysis as of May 8, 2022, the Company determined that (i) the carrying amounts of its Canada and New Zealand franchise rights acquired with indefinite-lived units of account exceeded their respective fair values and, as a result, the Company recorded impairment charges for its Canada and New Zealand units of account of $24,485 and $834, respectively, in the second quarter of fiscal 2022; and (ii) the carrying amounts of all of its other franchise rights acquired with indefinite-lived units of account did not exceed their respective fair values and, therefore, no impairment existed with respect thereto. In performing its annual impairment analysis as of May 9, 2021, ~~and May 3, 2020,~~ the Company determined that the carrying amounts of its franchise rights acquired with ~~indefinite lives~~indefinite-lived units of account did not exceed their respective fair values and, therefore, no impairment existed. In performing its annual impairment analysis as of May 8, 2022 and May 9, 2021, the Company determined that the carrying amounts of its goodwill reporting units did not exceed their respective fair values and, therefore, 0no impairment existed.

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 could cause a change in the results of the impairment assessments 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.

Based on the results of the Company’s May ~~9, 2021 annual franchise rights acquired impairment analysis performed for all of its~~ ~~units of account as~~ ~~of the October 2, 2021 balance sheet date, all units, except for New Zealand,~~ ~~had an~~ ~~estimated fair value at least 45% higher than the respective unit’s carrying amount. Collectively, these units of account represent 99.4% of the Company’s total franchise rights acquired. Based on the results of the Company’s~~8, 2022 annual franchise rights acquired impairment test performed for its ~~New Zealand~~United States unit of account, which ~~holds 0.6%~~held 92.7% of the Company’s franchise rights acquired as of the ~~October~~July 2, ~~2021~~ 2022 balance sheet date,, the estimated fair value of this unit of account exceeded its carrying value by approximately ~~10%~~15%. Based on the results of the Company’s May 8, 2022 annual franchise rights acquired impairment analysis performed for its Canada and New Zealand units of account, which held 4.6 % and 0.5%, respectively, of the Company’s franchise rights acquired as of the July 2, 2022 balance sheet date, the estimated fair values of these units of account were equal to their respective carrying values. The above difference or lack thereof between the estimated fair value of the applicable unit of account and its carrying value is referred to herein as the “Annual Impairment Headroom”. As previously disclosed, a change in the underlying assumptions for the United States, Canada and New Zealand could change the results of the impairment assessment and, as such, could result in an impairment of the franchise rights acquired related to the United States, Canada and New Zealand, for which the net book values were $698,383, $34,556 and $3,574, respectively, as of July 2, 2022. Based on the results of the Company’s May 8, 2022 annual franchise rights acquired impairment analysis performed for its remaining units of account, which collectively held 2.2% of the Company’s franchise rights acquired as of the July 2, 2022 balance sheet date, the estimated fair values of these units of account exceeded their respective carrying values by over 100%.

Based on the results of the Company’s May 8, 2022 annual goodwill impairment analysis performed for all of its reporting units, all units, except for the Republic of Ireland, had an estimated fair value at least 35% higher than the respective unit’s carrying amount. Collectively, these reporting units represented 97.4% of the Company’s total goodwill as of the October 1, 2022 balance sheet date. Based on the results of the Company’s May 8, 2022 annual goodwill impairment analysis performed for its Republic of Ireland reporting unit, which holds 2.6% of the Company’s goodwill as of the October 1, 2022 balance sheet date, the estimated fair value of this reporting unit exceeded its carrying value by approximately 14%. Accordingly, a change in the underlying assumptions for the Republic of Ireland may change the results of the impairment assessment and, as such, could result in an impairment of the goodwill related to the Republic of Ireland, for which the net book value was $4,009 as of October 1, 2022.

During the quarter ended October 1, 2022, the Company identified various qualitative and quantitative factors which collectively, when combined with the Annual Impairment Headroom discussed above for the United States, Canada and New Zealand units of account, indicated a triggering event had occurred within these units of account. These factors included actual business performance as compared to the assumptions used in its annual impairment test, the continued decline in the Company’s market capitalization and market factors, including the increase in interest rates. As a result of this triggering event, the Company performed an interim impairment test of these units of account. In performing this interim impairment test as of October 1, 2022, the Company determined that the carrying amounts of its United States, Canada and New Zealand franchise rights acquired with indefinite-lived units of account exceeded their respective fair values. Accordingly, the Company recorded impairment charges for its United States, Canada and New Zealand units of account of $298,291, $13,312 and $1,138, respectively, in the third quarter of fiscal 2022. The preponderance of these impairments was driven by the increased weighted-average cost of capital used in this interim impairment test as compared to the weighted-average cost of capital used in the May 8, 2022 annual impairment test of its indefinite-lived franchise rights acquired, reflecting market factors including higher interest rates and the trading values of the Company's equity and debt.

Based on the results of the Company’s October 1, 2022 interim franchise rights acquired impairment test performed for its United States, Canada and New Zealand units of account, which hold 91.5%, 4.4% and 0.5%, respectively, of the Company’s franchise rights acquired as of the October 1, 2022 balance sheet date, the estimated fair values of these units of account were equal to their respective carrying values. Accordingly, a change in the underlying assumptions for the United States, Canada and New Zealand may change the results of the impairment assessment and, as such, could result in an impairment of the franchise rights acquired related to the United States, Canada and New Zealand, for which the net book ~~value was $4,911~~values were $400,092, $19,342 and $2,141, respectively, as of October ~~2, 2021.~~1, 2022.

On August 10, 2018, the ~~results~~Company acquired substantially all of the ~~Company’s May 9, 2021 annual~~assets of Kurbo Health, Inc., a family-based healthy lifestyle coaching program, for a net purchase price of $3,063, of which $1,101 was allocated to goodwill. The goodwill ~~impairment test performed~~was deductible annually for ~~all of its reporting units as of the October 2, 2021 balance sheet date, there was significant headroom~~tax purposes. The Company determined in the ~~goodwill impairment analysis for those units, with the difference between the carrying value and the fair value exceeding 100%.~~

~~With respect to its Brazil reporting unit, during the first~~second quarter of fiscal ~~2020,~~2022 to exit the Kurbo business in the third quarter of fiscal 2022 as part of its strategic plan. As a result of this determination, the Company made a strategic decision to shift to an exclusively Digital business in that country. The Company determined that this decision, together with the negative impact of COVID-19, the ongoing challenging economic environment in Brazil and its reduced expectations regarding the reporting unit’s future operating cash flows, required the Company to perform an interim goodwill impairment analysis. In performing this discounted cash flow analysis, the Company determined that the carrying amount of this reporting unit exceeded its fair value and as a result recorded an impairment charge of ~~$3,665,~~$1,101 in the second quarter of fiscal 2022, which comprised the ~~remaining~~entire goodwill balance ~~of goodwill~~ for ~~this reporting unit.~~Kurbo.

As it related to its goodwill impairment analysis for Brazil, the Company estimated future debt-free cash flows in contemplation of its growth strategies for that market. In developing these projections, the Company considered the growth strategies under the current market conditions in Brazil. The Company then discounted the estimated future cash flows utilizing a discount rate which was calculated using the weighted-average cost of capital, which included the cost of equity and the cost of debt.

Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of ~~$8,032~~$8,347 and ~~$24,066~~$25,282 for the three and nine months ended October ~~2, 2021,~~1, 2022, respectively. Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of ~~$7,557~~$8,032 and ~~$22,108~~$24,066 for the three and nine months ended ~~September 26, 2020,~~October 2, 2021, respectively.

On April 13, 2021, the Company (1) repaid in full approximately ~~$1,189,750~~$1,189,750 in aggregate principal amount of senior secured tranche B term loans due in 2024 under its then-existing credit facilities and (2) redeemed all of the ~~$300,000~~$300,000 in aggregate principal amount of its then-outstanding ~~8.625%~~8.625% Senior Notes due in 2025 (the “Discharged Senior Notes”). On April 13, 2021, the Company’s then-existing credit facilities included a senior secured revolving credit facility (which included borrowing capacity available for letters of credit) due in 2022 with ~~$175,000~~$175,000 in an aggregate principal amount of commitments. There were 0no outstanding borrowings under such revolving credit facility on that date. The Company funded such repayment of loans and redemption of notes with cash on hand as well as with proceeds received from approximately ~~$1,000,000~~$1,000,000 in an aggregate principal amount of borrowings under its new credit facilities (as amended from time to time, the “Credit Facilities”) and proceeds received from the issuance of ~~$500,000~~$500,000 in aggregate principal amount of ~~4.500%~~4.500% Senior Secured Notes due 2029 (the “Senior Secured Notes”)., each as described below. These transactions are collectively referred to herein as the “April 2021 debt refinancing”. The Company’s new credit facilities consist of a $1,000,000 term loan facility and a $175,000 revolving credit facility (which includes borrowing capacity available for letters of credit) (collectively, as amended from time to time, the “New Credit Facilities”). During the second quarter of fiscal 2021, thethe Company incurred fees of ~~$37,910~~$37,910 (which included ~~$12,939~~$12,939 of a prepayment penalty on the Discharged Senior Notes and ~~$5,000~~$5,000 of a debt discount on its ~~New~~ Term Loan Facility (as defined below)) in connection with the April 2021 debt refinancing. In addition, the Company recorded a loss on early extinguishment of debt of ~~$29,169~~$29,169 in connection thereto. This early extinguishment of debt ~~write-off~~charge was comprised of ~~$12,939~~$12,939 of a prepayment penalty on the Discharged Senior Notes, ~~$9,017~~$9,017 of financing fees paid in connection with the April 2021 debt refinancing and ~~$7,213~~the write-off of $7,213 of pre-existing deferred financing fees and debt discount.

The ~~New~~ Credit Facilities were issued under a credit agreement, dated April 13, 2021 (as amended from time to time, the ~~“New Credit~~“Credit Agreement”), among the Company, as borrower, the lenders party thereto, and Bank of America, N.A. (“Bank of America”), as administrative agent and an issuing bank. The ~~New~~ Credit Facilities consist of (1) ~~$1,000,000~~$1,000,000 in aggregate principal amount of senior secured tranche B term loans due in 2028 (the ~~“New Term~~“Term Loan Facility”) and (2) ~~$175,000~~$175,000 in an aggregate principal amount of commitments under a senior secured revolving credit facility (which includes borrowing capacity available for letters of credit) due in 2026 (the ~~“New Revolving~~“Revolving Credit Facility”).

In December 2021, the Company made voluntary prepayments at par in an aggregate amount of $52,500 in respect of its outstanding term loans under the Term Loan Facility. As a result of these prepayments, the Company wrote off a debt discount and deferred financing fees of $1,183 in the aggregate in the fourth quarter of fiscal 2021.

As of October ~~2, 2021,~~1, 2022, the Company had ~~$997,500~~$945,000 in an aggregate principal amount of loans outstanding under the ~~New~~ Credit Facilities, with ~~$173,911~~$173,911 of availability and ~~$1,089~~$1,089 in issued but undrawn letters of credit outstanding under the ~~New~~ Revolving Credit Facility. There were 0no outstanding borrowings under the ~~New~~ Revolving Credit Facility as of October ~~2, 2021.~~1, 2022.

All obligations under the ~~New~~ Credit Agreement are guaranteed by, subject to certain exceptions, each of the Company’s current and future wholly-owned material domestic restricted subsidiaries. All obligations under the ~~New~~ Credit Agreement, and the guarantees of those obligations, are secured by substantially all of the assets of the Company and each guarantor, subject to customary exceptions, including:

The ~~New~~ Credit Facilities require the Company to prepay outstanding term loans, subject to certain exceptions, with:

The foregoing mandatory prepayments will be used to reduce the installments of principal on the ~~New~~ Term Loan Facility. The Company may voluntarily repay outstanding loans under the ~~New~~ Credit Facilities at any time without penalty, except for customary “breakage” costs with respect to LIBOR loans under the ~~New~~ Credit Facilities.

Borrowings under the ~~New~~ 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%~~0.50% per annum plus the Federal Funds Effective Rate as determined by the Federal Reserve Bank of New York, (b) the prime rate of Bank of America 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%~~1.00%; provided that such rate is not lower than a floor of ~~1.50%~~1.50% or (2) an applicable margin plus a LIBOR rate determined by reference to the cost 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 ~~0.50%~~0.50%. Borrowings under the ~~New~~ 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%~~0.50% per annum plus the Federal Funds Effective Rate as determined by the Federal Reserve Bank of New York, (b) the prime rate of Bank of America 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%~~1.00%; provided that such rate is not lower than a floor of ~~1.00%~~1.00% or (2) a LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, provided such rate is not lower than a floor of 0.zero. As of October ~~2, 2021,~~1, 2022, the applicable margins for the LIBOR rate borrowings under the ~~New~~ Term Loan Facility and the ~~New~~ Revolving Credit Facility were ~~3.50%~~3.50% and ~~2.50%~~2.75%, respectively. In the event that LIBOR is phased out as is currently expected, the ~~New~~ Credit Agreement provides that the Company and the administrative agent may amend the ~~New~~ 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 ~~New~~ Credit Agreement; provided that such lending syndicate may not object to a SOFR-based successor rate contained in any such amendment. If the Company fails to do so, its borrowings will be based off of the alternative base rate plus a margin.

On a quarterly basis, the Company pays a commitment fee to the lenders under the ~~New~~ Revolving Credit Facility in respect of unutilized commitments thereunder, which commitment fee fluctuates depending upon the Company’s Consolidated First Lien Leverage Ratio (as defined in the ~~New~~ Credit Agreement).

The ~~New~~ 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.

The availability of certain baskets and the ability to enter into certain transactions are also subject to compliance with certain financial ratios. In addition, if the aggregate principal amount of extensions of credit outstanding under the ~~New~~ Revolving Credit Facility as of any fiscal quarter end exceeds ~~35%~~35% of the amount of the aggregate commitments under the ~~New~~ Revolving Credit Facility in effect on such date, the Company must be in compliance with a Consolidated First Lien Leverage Ratio of ~~on or prior to the end of the first fiscal quarter of 2022, 6.00:1.00, with a step down to 5.75:~~5.75:1.00 for the period ending after the first fiscal quarter of 2022 through and including with the first fiscal quarter of 2023, with ~~an additional~~a step down to ~~5.50:~~5.50:1.00 for the period ending after the first fiscal quarter of 2023 through and including with the first fiscal quarter of 2024, with aan additional step down to ~~5.25:~~5.25:1.00 for the period ending after the first fiscal quarter of 2024 through and including with the first fiscal quarter of 2025 and again to ~~5.00:~~5.00:1.00, for the period following the first fiscal quarter of 2025. As of October 1, 2022, the Company’s actual Consolidated First Lien Leverage Ratio was 4.99:1.00 and there were no borrowings under its Revolving Credit Facility and total letters of credit issued were $1,089. The Company expects it may not be able to satisfy the Consolidated First Lien Leverage Ratio in the near future, and as a result, the amount of funds the Company is able to borrow under the Revolving Credit Facility would be effectively limited.

The Senior Secured Notes were issued pursuant to an Indenture, dated as of April 13, 2021 (as amended, supplemented or modified from time to time, the ~~“New Indenture”~~“Indenture”), among the Company, the guarantors named therein and The Bank of New York Mellon, as trustee and notes collateral agent. The ~~New~~ Indenture contains customary terms, events of default and covenants 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 Senior Secured Notes accrue interest at a rate per annum equal to ~~4.500%~~4.500% and will mature on April 15, ~~2029.~~ 2029. Interest on the Senior Secured Notes is payable semi-annually on April 15 and October 15 of each year, beginning on October 15, 2021.On or after April 15, 2024, the Company may on any one or more occasions redeem some or all of the Senior Secured Notes at a purchase price equal to ~~102.250%~~102.250% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, but not including, the redemption date, such optional redemption price decreasing to ~~101.125%~~101.125% on or after April 15, 2025 and to ~~100.000%~~100.000% on or after April 15, ~~2026.~~2026. Prior to April 15, 2024, the Company may on any one or more occasions redeem up to ~~40%~~40% of the aggregate principal amount of the Senior Secured Notes with an amount not to exceed the net proceeds of certain equity offerings at ~~104.500%~~104.500% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the redemption date. Prior to April 15, 2024, the Company may redeem some or all of the Senior Secured Notes at a make-whole price plus accrued and unpaid interest, if any, to, but not including, the redemption date. In addition, during any twelve-month period ending prior to April 15, 2024, the Company may redeem up to ~~10%~~10% of the aggregate principal amount of the Senior Secured Notes at a purchase price equal to ~~103.000%~~103.000% of the principal amount of the Senior Secured Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. If a change of control occurs, the Company must offer to purchase for cash the Senior Secured Notes at a purchase price equal to ~~101%~~101% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, 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 Senior Secured Notes at a purchase price equal to ~~100%~~100% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, but not including, the purchase date.

The Senior Secured Notes are guaranteed on a senior secured basis by the Company’s subsidiaries that guarantee the ~~New~~ Credit Facilities. The Senior Secured Notes and the note guarantees are secured by a first-priority lien on all the collateral that secures the ~~New~~ Credit Facilities, subject to a shared lien of equal priority with the Company’s and each guarantor’s obligations under the ~~New~~ Credit Facilities and subject to certain thresholds, exceptions and permitted liens.

At October ~~2, 2021,~~1, 2022, the Company had ~~$1,497,500~~$1,445,000 outstanding under the ~~New~~ Credit Facilities and the Senior Secured Notes, consisting of borrowings under the ~~New~~ Term Loan Facility of ~~$997,500, $0~~$945,000, $0 drawn down on the ~~New~~ Revolving Credit Facility and ~~$500,000~~$500,000 in aggregate principal amount of Senior Secured Notes issued and outstanding.

At October ~~2, 2021~~1, 2022 and January ~~2, 2021,~~1, 2022, the Company’s debt consisted of both fixed and variable-rate instruments. Interest rate swaps were entered into to hedge a portion of the cash flow exposure associated with the Company’s variable-rate borrowings. See Note 11 for information on the Company’s interest rate swaps. The weighted average interest rate (which includes amortization of deferred financing costs and debt discount) on the Company’s outstanding debt, exclusive of the impact of the swaps then in effect, was approximately ~~5.29%~~4.98% and ~~7.03%~~5.11% per annum at October ~~2, 2021~~1, 2022 and January ~~2, 2021,~~1, 2022, respectively, based on interest rates on these dates. The weighted average interest rate (which includes amortization of deferred financing costs and debt discount) on the Company’s outstanding debt, including the impact of the swaps then in effect, was approximately ~~5.80%~~5.28% and ~~7.41%~~5.62% per annum at October ~~2, 2021~~1, 2022 and January ~~2, 2021,~~1, 2022, respectively, based on interest rates on these dates.

~~For the nine months ended September 26, 2020, the difference between the U.S. federal statutory tax rate and the Company’s consolidated effective tax rate was primarily due to~~ ~~tax expense from income earned in foreign jurisdictions and state income tax expense, partially offset by a tax benefit related to FDII.~~

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 shareholder, Artal Group S.A. (“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. A second consolidated amended complaint was filed on September 27, 2019. The operative complaint asserted 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 alleged that, during the Class Period, the defendants disseminated materially false and misleading statements and/or concealed or recklessly disregarded material adverse facts. The complaint alleged 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 sought to recover unspecified damages on behalf of the class members. The Company filed a motion to dismiss the complaint on October 31, 2019. On November 30, 2020, the Court granted the Company’s motion to dismiss in full and dismissed the complaint. The plaintiffs did not appeal.

As of October ~~2, 2021~~1, 2022 and January ~~2, 2021,~~1, 2022, the Company had in effect interest rate swaps with an aggregate notional amount totaling ~~$500,000 and $750,000, respectively.~~$500,000.

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.~~2024. The initial notional amount of this swap was ~~$500,000.~~$500,000. During the term of this swap, the notional amount decreased from ~~$500,000~~$500,000 effective April 2, 2020 to ~~$250,000~~$250,000 on March 31, ~~2021.~~2021. This interest rate swap effectively fixed the variable interest rate on the notional amount of this swap at ~~3.1005%~~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~~(the “2019 swap”, and together with the 2018 swap, the “current swaps”) with an effective date of April 2, 2020 and a termination date of March 31, ~~2024.~~2024. The notional amount of this swap is ~~$250,000.~~$250,000. This interest rate swap effectively fixed the variable interest rate on the notional amount of this swap at ~~1.901%~~1.901%. The current swaps qualify for hedge accounting and, therefore, changes in the fair value of the current swaps have been recorded in accumulated other comprehensive loss.

As of October ~~2, 2021 and January 2, 2021,~~1, 2022, the cumulative unrealized ~~losses~~gain for qualifying hedges ~~were~~was reported as a component of accumulated other comprehensive loss in the ~~amounts~~amount of ~~$14,533~~$9,932 ($~~19,543~~13,127 before taxes) ~~and $20,979 ($28,161 before taxes), respectively.~~. As of ~~October 2, 2021 and~~ January ~~2, 2021,~~1, 2022, the cumulative unrealized loss for qualifying hedges was reported as a component of accumulated other comprehensive loss in the amount of $10,843 ($14,622 before taxes).

The Company is hedging forecasted transactions for periods not exceeding the next ~~three years.~~two years. The Company expects approximately ~~$4,906~~$6,287 ($~~6,557~~8,397 before taxes) of net derivative ~~losses~~gains included in accumulated other comprehensive loss at October ~~2, 2021,~~1, 2022, based on current market rates, will be reclassified into earnings within the next 12 months.

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

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

The Company’s significant financial instruments include long-term debt and interest rate swap agreements as of October ~~2, 2021~~1, 2022 and January ~~2, 2021. The fair value of the Company’s~~1, 2022. Since there were no outstanding borrowings under the ~~New~~ Revolving Credit Facility as of October 1, 2022 and January 1, 2022, the fair value approximated a carrying value of $0$0 at both October ~~2, 2021. The fair value of the Company’s borrowings under the then-existing Revolving Credit Facility approximated a carrying value of $0 at~~1, 2022 and January ~~2, 2021.~~1, 2022.

The fair value of the Company’s Credit Facilities is determined by utilizing average bid prices on or near the end of each fiscal quarter (Level 2 input). As of October ~~2, 2021~~1, 2022 and January ~~2, 2021,~~1, 2022, the fair value of the Company’s long-term debt was approximately ~~$1,455,961~~$922,092 and ~~$1,501,148,~~$1,389,306, respectively, as compared to the carrying value (net of deferred financing costs and debt discount) of ~~$1,468,329~~$1,421,239 and ~~$1,485,800,~~$1,418,104, respectively.

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

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

16.

Restructuring

2022 Plan

As previously disclosed, in the second quarter of fiscal 2022, the Company committed to a restructuring plan consisting of (i) an organizational realignment to simplify the Company’s corporate structure and reduce associated costs (the “Organizational Realignment”) and (ii) a continued rationalization of its real estate portfolio resulting in the termination of certain of the Company’s operating leases (together with the Organizational Realignment, the “2022 Plan”). In connection with the 2022 Plan, the Company previously expected to record restructuring charges of approximately $27,000 in the aggregate in fiscal 2022. The Company revised its estimate and currently expects to record restructuring expenses of approximately $33,000 in the aggregate in fiscal 2022 related to this plan. For the three and nine months ended October 1, 2022, the Company recorded restructuring expenses totaling $3,557 ($2,663 after tax) and $22,674 ($16,976 after tax), respectively.

The Organizational Realignment has resulted and will result in the elimination of certain positions and termination of employment for certain employees worldwide. In connection with its Organizational Realignment, the Company continues to expect to record charges of approximately $20,000 in the aggregate with respect to employee termination benefit costs (consisting primarily of general and administrative expenses), the majority of which were recorded in the second quarter of fiscal 2022.

In connection with the rationalization of its real estate portfolio, the Company previously expected to record charges of approximately $6,000 in the aggregate consisting of lease termination and other related costs in fiscal 2022. The Company revised its estimate and currently expects to record restructuring expenses with respect to lease termination and other related costs of approximately $12,000 in the aggregate in fiscal 2022.

Additionally, the Company expects to record other restructuring costs of approximately $1,000 in the aggregate in fiscal 2022.

Costs arising from the 2022 Plan related to separation payments, other employee termination expenses and lease termination and other related costs, except for lease impairment and accelerated depreciation and amortization related to leased locations, are expected to result in cash expenditures. For the three and nine months ended October 1, 2022, the components of the Company’s restructuring expenses were as follows:


	Three Months Ended			Nine Months Ended
	October 1, 2022			October 1, 2022
Lease termination and other related costs	$	(334	)	$	3,332
Employee termination benefit costs		1,882			16,789
Lease impairment		1,828			1,828
Other costs		181			725
Total restructuring expenses	$	3,557		$	22,674

See Note 3 for additional information in regard to the Company's lease impairment for the three and nine months ended October 1, 2022.

For the three and nine months ended October 1, 2022, restructuring expenses were recorded in the Company’s consolidated statements of net income as follows:


	Three Months Ended			Nine Months Ended
	October 1, 2022			October 1, 2022
Cost of revenues	$	(98	)	$	4,401
Selling, general and administrative expenses		3,655			18,273
Total restructuring expenses	$	3,557		$	22,674

All expenses were recorded to general corporate expenses and, therefore, there was no impact to the segments.

For the nine months ended October 1, 2022, the Company made payments of $1,877 towards the liability for the lease termination costs. For the nine months ended October 1, 2022, the Company made payments of $7,505 towards the liability for the employee termination benefit costs.

The Company expects the remaining lease termination liability of $547 and the remaining employee termination benefit liability of $9,284 to be paid in full by the end of fiscal 2024.

WW INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)

2021 Plan

As previously disclosed, in the first quarter of fiscal 2021, as the Company continued to evaluate its cost structure, anticipate consumer demand and focus on costs, the Company committed to a plan which has resulted ~~and will result~~ in the termination of operating leases and elimination of certain positions worldwide. ~~As previously disclosed, the Company estimates this plan will cost~~ ~~approximately $22,000 in~~For the fiscal ~~2021.~~ ~~During the three and nine months~~year ended ~~October 2, 2021,~~January 1, 2022, the Company recorded restructuring expenses totaling $~~$9,324~~21,534 ($~~6,975~~16,109 after tax) ~~and $20,898 ($15,634 after tax), respectively.~~.

For the ~~three and nine months~~fiscal year ended ~~October 2, 2021~~,January 1, 2022, the components of the Company’s restructuring expenses were as follows:

Three Months Ended

Nine Months Ended

October 2, 2021

October 2, 2021

Lease termination and other related costs
$
2,980

$
12,488

Employee termination benefit costs

6,344

8,410

Total restructuring expenses
$
9,324

$
20,898


	Fiscal Year Ended
	January 1, 2022
Lease termination and other related costs	$	12,688
Employee termination benefit costs		8,846
Total restructuring expenses	$	21,534

For the ~~three and nine months~~fiscal year ended ~~October 2, 2021~~,January 1, 2022, restructuring expenses were recorded in the Company’s consolidated statements of net income as follows:

Three Months Ended

Nine Months Ended

October 2, 2021

October 2, 2021

Cost of revenues
$
5,620

$
16,401

Selling, general and administrative expenses

3,704

4,497

Total restructuring expenses
$
9,324

$
20,898


	Fiscal Year Ended
	January 1, 2022
Cost of revenues	$	16,727
Selling, general and administrative expenses		4,807
Total restructuring expenses	$	21,534

All expenses were recorded to general corporate expenses and, therefore, there was no impact to the segments.

For the ~~nine months~~fiscal year ended ~~October 2, 2021,~~January 1, 2022, the Company made payments of ~~$6,623~~ $7,640towards the liability for the lease termination costs and decreased provision estimates by $3$3. For the ~~nine months~~fiscal year ended ~~October 2, 2021,~~January 1, 2022, the Company made payments of $4,802 towards the liability for the employee termination benefit costs.

For the nine months ended October 1, 2022, the Company made payments of ~~$1,693~~$777 towards the liability for the lease termination costs, decreased provision estimates by $681 and incurred additional lease termination and other related costs of $119. For the nine months ended October 1, 2022, the Company made payments of $3,407 towards the liability for the employee termination benefit costs, ~~and~~ ~~decreased~~increased provision estimates by ~~$25~~$215 and incurred additional employee termination benefit costs of $148.

As of October 1, 2022, there was no outstanding lease termination liability. The Company expects ~~the remaining lease termination liability of $2,516 and~~ the remaining employee termination benefit liability of ~~$6,692~~$1,000 to be paid in full inby the end of fiscal 2023.

~~WW INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

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

2020 Plan

As previously disclosed, in the second quarter of fiscal 2020, in connection with its cost-savings initiative, and its continued response to the COVID-19 pandemic and the related shift in market conditions, the Company committed to a plan of reduction in force which has resulted in the elimination of certain positions and termination of employment for certain employees worldwide. To adjust to anticipated consumer demand, the Company evolved its workshop strategy and expanded its restructuring plan to include lease termination and other related ~~costs~~.costs. For the fiscal year ended January 2, 2021, the Company recorded restructuring expenses totaling $~~totaling $33,092~~33,092 ($24,756 after tax).

For the fiscal year ended January 2, 2021,, the components of the Company’s restructuring expenses were as follows:


	Fiscal Year Ended
	January 2, 2021
Lease termination and other related costs	$	7,989
Employee termination benefit costs		25,103
Total restructuring expenses	$	33,092

WW INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)

For the fiscal year ended January 2, 2021, restructuring expenses were recorded in the Company’s consolidated statements of net income as follows:


	Fiscal Year Ended
	January 2, 2021
Cost of revenues	$	23,300
Selling, general and administrative expenses		9,792
Total restructuring expenses	$	33,092

All expenses were recorded to general corporate expenses and, therefore, there was no impact to the segments.

For the fiscal year ended January 2, 2021,, the Company made payments of ~~$645~~$645 towards the liability for the lease termination costs. For the fiscal year ended January 2, 2021,, the Company made payments of ~~$15,434~~$15,434 towards the liability for the employee termination benefit costs and increased provision estimates by ~~$180.~~$180.

For the ~~nine months~~fiscal year ended ~~October 2, 2021,~~January 1, 2022, the Company made payments of ~~$4,649~~$4,649 towards the liability for the lease termination costs and decreased provision estimates by ~~$470.~~$470. For the ~~nine months~~fiscal year ended ~~October 2, 2021,~~January 1, 2022, the Company made payments of ~~$6,343~~$6,773 towards the liability for the employee termination benefit costs and decreased provision estimates by ~~$1,136.~~$1,136.

For the nine months ended October 1, 2022, the Company made payments of $86 towards the liability for the lease termination costs and decreased provision estimates by $116. For the nine months ended October 1, 2022, the Company made payments of $1,164 towards the liability for the employee termination benefit costs.

As of October 1, 2022, there was no outstanding lease termination liability. The Company expects ~~the remaining lease termination liability of $202 and~~ the remaining employee termination benefit liability of ~~$2,370~~$776 to be paid in full inby the end of fiscal ~~2022.~~2023.

2625

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Except for historical information contained herein, this Quarterly Report on Form 10-Q includes “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, including, in particular, the statements about our plans, strategies, objectives and prospects and the impact of the COVID-19 virus 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,” “aim” 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:

•

~~the impact of the global outbreak of the COVID-19 virus on our business and liquidity and on the business environment and markets in which we operate;~~

•

the impact of the ongoing global outbreak of the COVID-19 virus on our business and liquidity and on the business and consumer environment and markets in which we operate;

•

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

•

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

•

~~our failure to continue to retain and grow our subscriber base;~~

•

our failure to continue to retain and grow our subscriber base;

•

our ability to continue to develop new, innovative services and products and enhance our existing services and products or the failure of our services, products or brands to continue to appeal to the market, or our ability to successfully expand into new channels of distribution or respond to consumer trends;

•

~~the ability to successfully implement strategic initiatives;~~

•

the ability to successfully implement strategic initiatives;

•

~~the effectiveness of our advertising and marketing programs, including the strength of our social media presence;~~

•

the effectiveness and efficiency of our advertising and marketing programs, including the strength of our social media presence;

•

~~the impact on our reputation of actions taken by our franchisees, licensees, suppliers and other partners;~~

•

the impact on our reputation of actions taken by our franchisees, licensees, suppliers and other partners;

•

~~the recognition of asset impairment charges;~~

•

the recognition of asset impairment charges;

•

~~the loss of key personnel, strategic partners or consultants or failure to effectively manage and motivate our workforce;~~

•

the loss of key personnel, strategic partners or consultants or failure to effectively manage and motivate our workforce;

•

~~the inability to renew certain of our licenses, or the inability to do so on terms that are favorable to us;~~

•

our chief executive officer transition;

•

~~the expiration or early termination by us of leases;~~

•

the inability to renew certain of our licenses, or the inability to do so on terms that are favorable to us;

•

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

•

the expiration or early termination by us of leases;

•

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

•

uncertainties related to a downturn in general economic conditions or consumer confidence, including the potential impact of political and social unrest, and the existing inflationary environment;

•

~~the seasonal nature of our business;~~

•

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

•

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

•

the seasonal nature of our business;

•

~~our failure to maintain effective internal control over financial reporting;~~

•

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

•

~~the impact of our substantial amount of debt, debt service obligations and debt covenants, and our exposure to variable rate indebtedness;~~

•

our failure to maintain effective internal control over financial reporting;

•

~~the ability to generate sufficient cash to service our debt and satisfy our other liquidity requirements;~~

•

the impact of our substantial amount of debt, debt service obligations and debt covenants, and our exposure to variable rate indebtedness;

•

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

•

the ability to generate sufficient cash to service our debt and satisfy our other liquidity requirements;

•

~~the impact of data security breaches or privacy concerns, including the costs of compliance with evolving privacy laws and regulations;~~

•

uncertainties regarding the satisfactory operation of our technology or systems;

•

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

•

the impact of data security breaches and other malicious acts or privacy concerns, including the costs of compliance with evolving privacy laws and regulations;

•

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

•

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

•

~~the outcomes of litigation or regulatory actions;~~

•

risks and uncertainties associated with our international operations, including regulatory, economic, political, social, intellectual property, and foreign currency risks, which risks may be exacerbated as a result of the war in Ukraine;

•

~~the impact of existing and future laws and regulations;~~

•

the outcomes of litigation or regulatory actions;

•

the possibility that the interests of Artal Group S.A., or Artal, the largest holder of our common stock and a shareholder with significant influence over us, will conflict with our interests or the interests of other holders of our common stock;

•

the impact of existing and future laws and regulations;

•

the impact that the sale of substantial amounts of our common stock by existing large shareholders, or the perception that such sales could occur, could have on the market price of our common stock; and

•

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

•

2726

•

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

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

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~ITEM 2.~~

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

WW International, Inc.~~, formerly known as 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”~~“Company,” “Weight Watchers” and “WW” refer to WW 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; 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 and Other is also a reportable segment. Our “Digital” business refers to providing subscriptions to our digital product offerings, including ~~Digital 360 and~~ Personal Coaching + ~~Digital.~~Digital and Digital 360 as applicable. Our “Workshops + Digital” ~~(formerly known as “Studio + Digital”)~~ business refers to providing unlimited access to our workshops combined with our digital subscription product offerings to commitment plan ~~subscribers.~~subscribers, including former Digital 360 members as applicable. It also includes the provision of access to workshops for members who do not subscribe to commitment plans, including our “pay-as-you-go” members. In the second quarter of fiscal 2022, we ceased offering our Digital 360 product. More than a majority of associated members were transitioned from our Digital business to our Workshops + Digital business during the second quarter of fiscal 2022, with a de minimis number transitioning during the beginning of the third quarter of fiscal 2022. For additional details on the cessation of this product offering and how these transitions of former Digital 360 members at the then-current pricing for such product impacted the fiscal 2022 second quarter and first half number of End of Period Subscribers in each business as well as the associated Paid Weeks and Revenues for each business, see our Quarterly Report on Form 10-Q for the second quarter of fiscal 2022.

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:

•

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

•

“fiscal 2020” refers to our fiscal year ended January 2, 2021 (included a 53rd week);

•

“fiscal 2021” refers to our fiscal year ended January 1, 2022;

•

“fiscal 2022” refers to our fiscal year ended December 31, 2022;

•

“fiscal 2023” refers to our fiscal year ended December 30, 2023;

•

“fiscal 2024” refers to our fiscal year ended December 28, 2024;

•

“fiscal 2025” refers to our fiscal year ended January 3, 2026 (includes a 53rd week);

•

“fiscal 2026” refers to our fiscal year ended January 2, 2027; and

•

“fiscal 2027” refers to our fiscal year ended January 1, 2028.

•

~~“fiscal 2018” refers to our fiscal year ended December 29, 2018;~~

•

~~“fiscal 2019” refers to our fiscal year ended December 28, 2019;~~

•

~~“fiscal 2020” refers to our fiscal year ended January 2, 2021 (included a 53~~^rd ~~week);~~

•

~~“fiscal 2021” refers to our fiscal year ended January 1, 2022;~~

•

~~“fiscal 2022” refers to our fiscal year ended December 31, 2022;~~

•

~~“fiscal 2023” refers to our fiscal year ended December 30, 2023;~~

•

~~“fiscal 2024” refers to our fiscal year ended December 28, 2024;~~

•

~~“fiscal 2025” refers to our fiscal year ended January 3, 2026 (includes a 53~~^rd ~~week); and~~

•

~~“fiscal 2026” refers to our fiscal year ended January 2, 2027.~~

The following terms used in this Quarterly Report on Form 10-Q are our trademarks: Digital 360^TM®, PersonalPoints~~myWW~~TM^® and Weight Watchers®.

You should read the following discussion in conjunction with our Annual Report on Form 10-K for fiscal ~~2020 as amended~~2021 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”).

NON-GAAP FINANCIAL MEASURES

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. Gross profit, gross profit margin, operating (loss) income, ~~and~~ operating (loss) income margin and components thereof are discussed in this Quarterly Report on Form 10-Q both as reported (on a GAAP basis) and as adjusted (on a non-GAAP basis), as applicable, with respect to (i) the third quarter of fiscal 2022 to exclude (a) the impact of the impairment charges for our franchise rights acquired related to our United States, Canada and New Zealand units of account and (b) the net impact of (x) charges associated with our previously disclosed 2022 restructuring plan (the “2022 plan”) and (y) charges associated with our previously disclosed 2021 organizational restructuring plan (the “2021 plan”); (ii) the first nine months of fiscal 2022 to exclude (a) the impact of impairment charges for our franchise rights acquired related to our United States, Canada and New Zealand units of account and the impairment charge for our goodwill related to our wholly-owned subsidiary Kurbo, Inc. (“Kurbo”) and (b) the net impact of (x) charges associated with the 2022 plan, (y) charges associated with the 2021 plan or the reversal of certain of the charges associated with the 2021 plan, as applicable, and (z) the reversal of certain of the charges associated with our previously disclosed 2020 organizational restructuring plan (the “2020 plan”); and (iii) the third quarter and first nine months of fiscal 2021 to exclude the net impact of (x) charges associated with ~~our previously disclosed~~the 2021 ~~organizational restructuring~~ plan and (y) the reversal of certain of the charges associated with our previously disclosed 2020 organizational restructuring plan; (ii) the third quarter of fiscal 2020 to exclude the impact of charges associated with our previously disclosed 2020 organizational restructuring plan (the “2020 restructuring charges”); and (iii) the first nine months of fiscal 2020 to exclude the impact of (x) the one-time stock compensation expense associated with the previously disclosed option granted to Ms. Oprah Winfrey in connection with the Company extending its partnership with Ms. Winfrey (the “Winfrey Stock Compensation expense”), (y) the 2020 ~~restructuring charges and (z) the impairment charge for our goodwill related to our Brazil reporting unit.~~plan. We generally refer to such non-GAAP measures as follows: (i) with respect to the adjustments for the third quarter of fiscal 2022, as excluding or adjusting for the impact of the franchise rights acquired impairments and the net impact of restructuring charges; (ii) with respect to the adjustments for the first nine months of fiscal 2022, as excluding or adjusting for the impact of franchise rights acquired and goodwill impairments and the net impact of restructuring charges; and (iii) with respect to the adjustments for the third quarter and first nine months of fiscal 2021, as excluding or adjusting for the net impact of restructuring charges; and (ii) with respect to the adjustments for the third quarter and first nine months of fiscal 2020, as applicable, as excluding or adjusting for the impact of the Winfrey Stock Compensation expense, the restructuring charges and/or the goodwill impairment charge.charges. We also 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”); earnings before interest, taxes, depreciation, amortization, stock-based compensation, franchise rights acquired and goodwill impairments, net restructuring charges, and early extinguishment of debt ~~restructuring charges (including~~with respect to the ~~net impact where applicable)~~Company’s previously disclosed April 2021 debt refinancing and ~~goodwill impairment~~voluntary debt prepayments (“Adjusted EBITDAS”); total debt less unamortized deferred financing costs, unamortized debt discount and cash on hand (i.e., net debt); and a net debt/Adjusted EBITDAS ratio. See “—Liquidity and Capital Resources—EBITDAS, Adjusted EBITDAS and Net Debt” for the reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measure in each case. 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.

USE OF CONSTANT CURRENCY

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 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.

CRITICAL ACCOUNTING ~~POLICIES~~ESTIMATES

Franchise Rights Acquired

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 for potential impairment on at least an annual basis ~~for impairment.~~or more often if events so require.

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 Workshops + Digital business and a relief from royalty methodology for our franchise rights related to our 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 Workshops + Digital business and the Digital business in the country in which the applicable acquisition occurred. The net book values of these franchise rights in the United States, Canada, United Kingdom, Australia and New Zealand as of the October ~~2, 2021~~1, 2022 balance sheet date were ~~$698.4~~$400.1 million, ~~$60.1~~$19.3 million, ~~$12.2~~$10.1 million, ~~$6.5~~$5.8 million and ~~$4.9~~$2.1 million, respectively.

In our hypothetical start-up approach analysis for fiscal ~~2021,~~2022, 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 Workshops + Digital business in each country based on assumptions regarding revenue growth and operating income margins. ~~The~~In our relief from royalty approach analysis for fiscal 2022, the cash flows associated with the Digital business in each country were based on the expected Digital revenue for such country and the application of a royalty rate based on current market terms. The cash flows for the Workshops + Digital and the Digital businesses were discounted utilizing rates which were calculated using the weighted-average cost of capital, which included the cost of equity and the cost of debt.

Goodwill

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 unit. We have determined the appropriate reporting unit for purposes of assessing annual impairment to be the country for all reporting units. The net book values of goodwill in the United States, Canada and other countries as of the October ~~2, 2021~~1, 2022 balance sheet date were ~~$105.1~~$104.0 million, ~~$42.4~~$38.8 million and ~~$10.0~~$13.4 million, respectively.

For all of our reporting units tested as of May ~~9, 2021,~~8, 2022, we estimated future cash flows by utilizing the historical debt-free cash flows (cash flows provided by operations 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 weighted-average cost of capital, which included the cost of equity and the cost of debt.

Indefinite-Lived Franchise Rights Acquired and Goodwill Annual Impairment Test

We review indefinite-lived intangible assets, including franchise rights acquired with indefinite lives, and goodwill 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 ~~9, 2021~~8, 2022 and May ~~3, 2020,~~9, 2021, each the first day of fiscal May, on our indefinite-lived intangible assets and goodwill.

In performing our annual impairment analysis as of May 8, 2022, we determined that (i) the carrying amounts of our Canada and New Zealand franchise rights acquired with indefinite-lived units of account exceeded their respective fair values and, as a result, we recorded impairment charges for our Canada and New Zealand units of account of $24.5 million and $0.8 million, respectively, in the second quarter of fiscal 2022; and (ii) the carrying amounts of all of our other franchise rights acquired with indefinite-lived units of account did not exceed their respective fair values and, therefore, no impairment existed with respect thereto. In performing our annual impairment analysis as of May 9, 2021, ~~and May 3, 2020,~~ we determined that the carrying amounts of our franchise rights acquired with ~~indefinite lives~~indefinite-lived units of account did not exceed their respective fair values and, therefore, no impairment existed. In performing our annual impairment analysis as of May 8, 2022 and May 9, 2021, we determined that the carrying amounts of our goodwill reporting units did not exceed their respective fair values and, therefore, no impairment existed.

When determining fair value, we utilize various assumptions, including projections of future cash flows, growth rates and discount rates. A change in these underlying assumptions could cause a change in the results of the impairment assessments 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, we would be required to record a corresponding charge, 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 these assumptions 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 at the time of testing, 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 ~~2020 as amended.~~2021.

Based on the results of our May 9, 2021 annual franchise rights acquired impairment analysis performed for all of our units of account as of the October 2, 2021 balance sheet date, all units, except for New Zealand, had an estimated fair value at least 45% higher than the respective unit’s carrying amount. Collectively, these units of account represent 99.4% of our total franchise rights acquired. Based on the results of our8, 2022 annual franchise rights acquired impairment test performed for our ~~New Zealand~~United States unit of account, which ~~holds 0.6%~~held 92.7% of our franchise rights acquired as of the ~~October~~July 2, ~~2021~~2022 balance sheet date, the estimated fair value of this unit of account exceeded its carrying value by approximately ~~10%~~15%. ~~Accordingly,~~Based on the results of our May 8, 2022 annual franchise rights acquired impairment analysis performed for our Canada and New Zealand units of account, which held 4.6% and 0.5%, respectively, of our franchise rights acquired as of the July 2, 2022 balance sheet date, the estimated fair values of these units of account were equal to their respective carrying values. The above difference or lack thereof between the estimated fair value of the applicable unit of account and its carrying value is referred to herein as the Annual Impairment Headroom. As previously disclosed, a change in the underlying assumptions for the United States, Canada and New Zealand ~~may~~could change the results of the impairment assessment and, as such, could result in an impairment of the franchise rights acquired related to the United States, Canada and New Zealand, for which the net book ~~value was $4.9~~values were $698.4 million, $34.6 million and $3.6 million, respectively, as of ~~October~~July 2, ~~2021.~~2022. Based on the results of our May 8, 2022 annual franchise rights acquired impairment analysis performed for our remaining units of account, which collectively held 2.2% of our franchise rights acquired as of the July 2, 2022 balance sheet date, the estimated fair values of these units of account exceeded their respective carrying values by over 100%.

In performing this annual impairment analysis for fiscal ~~2021,~~2022, in our hypothetical start-up approach analysis, for the year of maturity, we assumed Workshops + Digital revenue (comprised of Workshops + Digital Fees and revenues from products sold to members in studios) growth of ~~(41.5%)~~23.0% to ~~5.6%~~106.2% in the year of maturity from fiscal ~~2020,~~2021, in each case, earned in the applicable country and assumed cumulative annual revenue growth rates for the years beyond the year of maturity of ~~1.8%~~2.4%. For the year of maturity and beyond, we assumed operating income margin rates of ~~7.1%~~(3.0%) to ~~11.7%~~8.8%. In our relief from royalty approach, we assumed Digital revenue growth in each country of (25.6%) to 16.1% for fiscal 2022.

Based on the results of our May ~~9, 2021~~8, 2022 annual goodwill impairment ~~test~~analysis performed for all of our reporting units, all units, except for the Republic of Ireland, had an estimated fair value at least 35% higher than the respective unit’s carrying amount. Collectively, these reporting units represented 97.4% of our total goodwill as of the October ~~2, 2021~~1, 2022 balance sheet date. Based on the results of our May 8, 2022 annual goodwill impairment analysis performed for our Republic of Ireland reporting unit, which holds 2.6% of our goodwill as of the October 1, 2022 balance sheet date, ~~there was significant headroom~~the estimated fair value of this reporting unit exceeded its carrying value by approximately 14%. Accordingly, a change in the underlying assumptions for the Republic of Ireland may change the results of the impairment assessment and, as such, could result in an impairment of the goodwill ~~impairment analysis~~related to the Republic of Ireland, for ~~those units, with~~which the ~~difference between the carrying~~net book value ~~and the fair value exceeding 100%.~~

was $4.0 million as of October 1, 2022.

The following are the more significant assumptions utilized in our annual impairment analyses for fiscal ~~2021~~2022 and fiscal ~~2020:~~2021:

Fiscal

Fiscal

2021

2020

Debt-Free Cumulative Annual Cash Flow Growth Rate

0.2% to 2.6%

4.0% to 13.9%

Discount Rate

8.5%

9.5%

~~Brazil Goodwill~~


	Fiscal 2022	Fiscal 2021
Debt-Free Cumulative Annual Cash Flow Growth Rate	1.2% to 20.6%	0.2% to 2.6%
Discount Rate	9.6%	8.5%

Indefinite-Lived Franchise Rights Acquired Interim Impairment Test

~~With respect to our Brazil reporting unit, during~~During the ~~first~~ quarter ~~of fiscal 2020,~~ended October 1, 2022, we ~~made a strategic decision to shift to an exclusively Digital business in that country. We determined that this decision, together~~identified various qualitative and quantitative factors which collectively, when combined with the ~~negative impact~~Annual Impairment Headroom discussed above for the United States, Canada and New Zealand units of ~~COVID-19,~~account, indicated a triggering event had occurred within these units of account. These factors included actual business performance as compared to the ~~ongoing challenging economic environment~~assumptions used in ~~Brazil~~our annual impairment test, the continued decline in our market capitalization and ~~our reduced expectations regarding~~market factors, including the ~~reporting unit’s future operating cash flows, required us to perform~~increase in interest rates. As a result of this triggering event, we performed an interim ~~goodwill~~ impairment ~~analysis.~~test of these units of account. In performing this ~~discounted cash flow analysis,~~interim impairment test as of October 1, 2022, we determined that the carrying ~~amount~~amounts of our United States, Canada and New Zealand franchise rights acquired with indefinite-lived units of account exceeded their respective fair values. Accordingly, we recorded impairment charges for our United States, Canada and New Zealand units of account of $298.3 million, $13.3 million and $1.1 million, respectively, in the third quarter of fiscal 2022. The preponderance of these impairments was driven by the increased weighted-average cost of capital used in this ~~reporting unit exceeded~~interim impairment test of 13.4% as compared to the weighted-average cost of capital used in the May 8, 2022 annual impairment test of its indefinite-lived franchise rights acquired of 9.6%, reflecting market factors including higher interest rates and the trading values of our equity and debt.

When determining fair value, ~~and as a result recorded an impairment charge~~we utilize various assumptions, including projections of ~~$3.7 million, which comprised the remaining balance of goodwill for this reporting unit.~~

As it related to our goodwill impairment analysis for Brazil, we estimated future debt-free cash flows in contemplation of our growth strategies for that market. In developing these projections, we considered the growth strategies under the current market conditions in Brazil. We then discounted the estimated future cash flows, ~~utilizing~~growth rates and discount rates. A change in these underlying assumptions could cause a change in the results of the impairment assessments 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, we would be required to record a corresponding charge, 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 these assumptions are appropriate.

In performing this interim impairment analysis, in our hypothetical start-up approach analysis, for the year of maturity, we assumed Workshops + Digital revenue (comprised of Workshops + Digital Fees and revenues from products sold to members in studios) growth of 20.2% to 57.6% in the year of maturity from fiscal 2021, in each case, earned in the applicable country and assumed cumulative annual revenue growth rates for the years beyond the year of maturity of 2.5%. For the year of maturity and beyond, we assumed operating income margin rates of 2.3% to 8.8%. In our relief from royalty approach, we assumed Digital revenue growth in each country of (21.5%) to 1.6% for fiscal 2022.

Based on the results of our October 1, 2022 interim franchise rights acquired impairment test performed for our United States, Canada and New Zealand units of account, which hold 91.5%, 4.4% and 0.5%, respectively, of our franchise rights acquired as of the October 1, 2022 balance sheet date, the estimated fair values of these units of account were equal to their respective carrying values. Accordingly, a change in the underlying assumptions for the United States, Canada and New Zealand may change the results of the impairment assessment and, as such, could result in an impairment of the franchise rights acquired related to the United States, Canada and New Zealand, for which the net book values were $400.1 million, $19.3 million and $2.1 million, respectively, as of October 1, 2022.

Any impairment test is highly dependent on the assumptions used. The most significant assumptions used in the interim impairment test discussed above were the discount rate applied and the Digital revenue growth rates. We applied a discount rate ~~which was calculated using the~~of 13.4% based on our actual weighted-average cost of capital, which included the cost of equity and the cost of debt. We projected Digital revenues based upon our current and past performance. Changes in these assumptions would have a significant impact on the valuation model. Holding all other assumptions constant, a hypothetical 50 basis point increase in our discount rate assumption would decrease the fair values of the United States, Canada and New Zealand units of account by approximately 5.5%, 5.4% and 4.2%, respectively, which would result in additional impairment charges. Holding all other assumptions constant, a hypothetical 1% reduction in projected Digital revenues for each year in the analysis would decrease the fair values of the United States, Canada and New Zealand units of account by approximately 0.9%, 1.2% and 1.0%, respectively, which would also result in additional impairment charges.

~~Other~~ Kurbo Goodwill Impairment

On August 10, 2018, we acquired substantially all of the assets of Kurbo Health, Inc., a family-based healthy lifestyle coaching program, for a net purchase price of $3.1 million, of which $1.1 million was allocated to goodwill. The goodwill was deductible annually for tax purposes. We determined in the second quarter of fiscal 2022 to exit the Kurbo business in the third quarter of fiscal 2022 as part of our strategic plan. As a result of this determination, we recorded an impairment charge of $1.1 million in the second quarter of fiscal 2022, which comprised the entire goodwill balance for Kurbo.

Critical Accounting Policies

~~For a discussion of the other~~Information concerning our critical accounting policies ~~affecting us, see “Item 7. Management’s Discussion and Analysis~~is set forth in “Note 2. Summary of ~~Financial Condition and Results of Operations—Critical~~Significant Accounting Policies” of our audited consolidated financial statements contained in our Annual Report on Form 10-K for fiscal ~~2020 as amended.~~2021. Our critical accounting policies have not changed since the end of fiscal ~~2020.~~2021.

PERFORMANCE INDICATORS

Our management team regularly reviews and analyzes a number of financial and operating metrics, including the key performance indicators listed below, in order to manage our business, measure our performance, identify trends affecting our business, determine the allocation of resources, make decisions regarding corporate strategies and assess the quality and potential variability of our cash flows and earnings. We also believe that these key performance indicators are useful to both management and investors for forecasting purposes and to facilitate comparisons to our historical operating results. These metrics are supplemental to our GAAP results and include operational measures.

•

Revenues—Our “Subscription Revenues” consist of “Digital Subscription Revenues” and “Workshops + Digital Fees” (formerly known as “Studio + Digital Fees”). “Digital Subscription Revenues” consist of the fees associated with subscriptions for our Digital offerings, including Digital 360 and Personal Coaching + Digital.•

Revenues—Our “Subscription Revenues” consist of “Digital Subscription Revenues” and “Workshops + Digital Fees”. “Digital Subscription Revenues” consist of the fees associated with subscriptions for our Digital offerings, including Personal Coaching + Digital and Digital 360 as applicable. “Workshops + Digital Fees” consist of the fees associated with our subscription plans for combined workshops and digital offerings and other payment arrangements for access to workshops. In addition, “product sales and other” consists of sales of consumer products via e-commerce, in studios and through our trusted partners, revenues from licensing and publishing, other revenues, ~~(including revenues from the~~ ~~WW Presents: Oprah’s 2020 Vision~~ ~~tour),~~ and, in the case of the consolidated financial results and Other reportable segment, franchise fees with respect to commitment plans and royalties.

•

Paid Weeks—The “Paid Weeks” metric reports paid weeks by WW customers in Company-owned operations for a given period as follows: (i) “Digital Paid Weeks” is the total paid subscription weeks for our digital subscription products (including Digital 360 and Personal Coaching + Digital); (ii) “Workshops + Digital Paid Weeks” (formerly known as “Studio + Digital Paid Weeks”) is the sum of total paid commitment plan weeks which include workshops and digital offerings and total “pay-as-you-go” weeks; and (iii) “Total Paid Weeks” is the sum of Digital Paid Weeks and Workshops + Digital Paid Weeks.

•

Incoming Subscribers—“Subscribers” refer to Digital subscribers and Workshops + Digital subscribers who participate in recur bill programs in Company-owned operations. The “Incoming Subscribers” metric reports WW subscribers in Company-owned operations at a given period start as follows: (i) “Incoming Digital Subscribers” is the total number of Digital, including Digital 360 and Personal Coaching + Digital, subscribers; (ii) “Incoming Workshops + Digital Subscribers” (formerly known as “Incoming Studio + Digital Subscribers”) is the total number of commitment plan subscribers that have access to combined workshops and digital offerings; and (iii) “Incoming Subscribers” is the sum of Incoming Digital Subscribers and Incoming Workshops + Digital Subscribers. Recruitment and retention are key drivers for this metric.

•

Paid Weeks—The “Paid Weeks” metric reports paid weeks by WW customers in Company-owned operations for a given period as follows: (i) “Digital Paid Weeks” is the total paid subscription weeks for our digital subscription products (including Personal Coaching + Digital and Digital 360 as applicable); (ii) “Workshops + Digital Paid Weeks” is the sum of total paid commitment plan weeks which include workshops and digital offerings and total “pay-as-you-go” weeks; and (iii) “Total Paid Weeks” is the sum of Digital Paid Weeks and Workshops + Digital Paid Weeks.

•

Incoming Subscribers—“Subscribers” refer to Digital subscribers and Workshops + Digital subscribers who participate in recur bill programs in Company-owned operations. The “Incoming Subscribers” metric reports WW subscribers in Company-owned operations at a given period start as follows: (i) “Incoming Digital Subscribers” is the total number of Digital, including Personal Coaching + Digital and Digital 360 (as applicable), subscribers; (ii) “Incoming Workshops + Digital Subscribers” is the total number of commitment plan subscribers that have access to combined workshops and digital offerings; and (iii) “Incoming Subscribers” is the sum of Incoming Digital Subscribers and Incoming Workshops + Digital Subscribers. Recruitment and retention are key drivers for this metric.

•

End of Period Subscribers—The “End of Period Subscribers” metric reports WW subscribers in Company-owned operations at a given period end as follows: (i) “End of Period Digital Subscribers” is the total number of Digital, including Personal Coaching + Digital and Digital 360 (as applicable), subscribers; (ii) “End of Period Workshops + Digital Subscribers” is the total number of commitment plan subscribers that have access to combined workshops and digital offerings; and (iii) “End of Period Subscribers” is the sum of End of Period Digital Subscribers and End of Period Workshops + Digital Subscribers. Recruitment and retention are key drivers for this metric.

•

Gross profit and operating expenses as a percentage of revenue.

•

End of Period Subscribers—The “End of Period Subscribers” metric reports WW subscribers in Company-owned operations at a given period end as follows: (i) “End of Period Digital Subscribers” is the total number of Digital, including Digital 360 and Personal Coaching + Digital, subscribers; (ii) “End of Period Workshops + Digital Subscribers” (formerly known as “End of Period Studio + Digital Subscribers”) is the total number of commitment plan subscribers that have access to combined workshops and digital offerings; and (iii) “End of Period Subscribers” is the sum of End of Period Digital Subscribers and End of Period Workshops + Digital Subscribers. Recruitment and retention are key drivers for this metric.

•

~~Gross profit and operating expenses as a percentage of revenue.~~

COVID-19 PANDEMIC

The novel coronavirus (including its variants, COVID-19) pandemic continues to evolve and have unpredictable impacts on consumer sentiment and behavior, which in turn have impacted and may impact our business ~~operations~~performance and operations. We have seen significant shifts in consumer sentiment with respect to the ~~markets in~~weight loss and wellness marketplace, which we ~~operate. While~~believe in part is attributable to the ~~outbreak~~evolution of the pandemic. COVID-19 ~~did not have~~had a significant effect on our ~~reported results for~~recruitments starting in March 2020. Our Workshops + Digital recruitments were substantially negatively impacted during the first ~~quarter~~year of ~~fiscal 2020, it did have~~the pandemic. While Digital recruitments were strong in the beginning of the COVID-19 pandemic, a ~~significant effect on~~subsequent turn in consumer sentiment drove a decline in Digital recruitments. Given the long-term subscription model of our ~~reported results for~~business, these declines in recruitment continued to impact the ~~remainder~~number of ~~fiscal 2020 and the first nine months of fiscal 2021. The number of~~our End of Period Subscribers ~~for~~in the third quarter of fiscal 2021 decreased 4.3% versus the prior year period. The challenging COVID-19 environment for our Workshops + Digital business drove a significant decrease in End of Period Workshops + Digital Subscribers for the third quarter of fiscal 2021 versus2022, which declined compared to the prior year period. Additionally, our mix shift toward our Digital business, which was significant during the impact of COVID-19 on consumer sentiment and prioritization of discretionary spending was reflected in the decrease in End of Period Digital Subscribers. The negative impact of COVID-19 is expected to continue to impact the business in the fourth quarter of fiscal 2021 and potentially in subsequent periods.

The extent to which our operations and business trends will continue in future periods to be impacted by, and any unforeseen costs will result from, the ongoing outbreak of COVID-19 will depend largely on future developments, which are highly uncertain and cannot be accurately predicted. These developments include, among other things, new information that may emerge concerning the severityonset of the ~~outbreak, health implications~~pandemic, especially when amplified by the nature of our subscription business, negatively impacted revenue. Over the longer term, it remains uncertain how the COVID-19 pandemic will impact consumer demand for our products and ~~vaccine availability, actions by government authorities to contain the outbreak or treat its impact,~~services and ~~changes in~~ consumer preferences and behavior ~~resulting from the outbreak and such government actions.~~ generally.

We continue to ~~actively monitor the ongoing global outbreak of COVID-19~~serve our members virtually, both via our Digital business and ~~its impact and related developments.~~

~~In response to the public health crisis posed by COVID-19, in March 2020, we suspended our in-person~~through virtual workshops, and moved quickly to transition these workshops to an entirely virtual experience. In June 2020, we began a phased re-opening with reduced operations of a limited number of our studio locations. We continue to evolve our workshop strategy as we evaluate our cost structure and respond to shifting consumer sentiment. We are selectively resuming in-person workshops where we can in a cost-efficient manner that promotes the health and safety of our employees and members. However, during these uncertain times, we will continue to adhere to the requirements in local jurisdictions to close re-opened studios as necessary, and we may not be able to open studios as planned or may need to further reduce operations. We continue to serve our members virtually, both via our Digital business and through virtual workshops now available to our Workshops + Digital subscribers. Nevertheless, our Workshops + Digital business, including its business operations, number of subscribers and in-studio product sales, remain substantially affected by the evolving COVID-19 environment. We expect that applicable regulatory restrictions, including stay-at-home requirements and restrictions on in-person group gatherings, may continue to impact our studio operations, including how we conduct our in-person workshops.

As we continue to address the impact of the pandemic, and the related evolving legal and consumer landscape, we are focused on how to best meet our members’ and consumers’ needs as restrictions are lifted or reinstated. We consolidated certain of our studios into branded studio locations and continue to close certain other branded studio locations. The decision to re-open a studio location, if at all, or further consolidate studio locations, will be influenced by a number of factors, including applicable legal restrictions, consumer confidence and preferences, changes in consumer behavior, and the protection of the health and safety of our employees and members, and will be dependent on cost efficiencies and alignment with our digital and brand strategy. The current number of our studio locations is significantly lower than that prior to the pandemic, and we expect it to remain below pre-COVID-19 levels. As a result, we have incurred, and may continue to incur, significant costs associated with our real estate realignment.

While we expect the effects of the pandemic and the related responses, including shifts in consumer sentiment and behavior, to negatively impact our results of operations, cash flows and financial position, the uncertainty of the full extent of the duration and severity of the consumer, economic and operational impacts of COVID-19 means we cannot reasonably estimate the related financial impact at this time. This dynamic situation continues to drive uncertainty at the macroeconomic, local and consumer levels. We continue to actively monitor the ongoing global outbreak of COVID-19 and its impact and related developments. For more information, see “Item 1A. Risk Factors” in Part I of our Annual Report on Form 10-K for fiscal 2020 as amended. We continue to believe that our powerful communities and our ability to inspire people to adopt healthy habits will be invaluable to people across the globe as they continue to acclimate to new social and economic environments, and that they uniquely position us in the markets in which we operate.2021.

RESULTS OF OPERATIONS

THREE MONTHS ENDED OCTOBER ~~2, 2021~~1, 2022 COMPARED TO THE THREE MONTHS ENDED ~~SEPTEMBER 26, 2020~~OCTOBER 2, 2021

The table below sets forth selected financial information for the third quarter of fiscal 2022 from our consolidated statements of net income for the three months ended October 1, 2022 versus selected financial information for the third quarter of fiscal 2021 from our consolidated statements of net income for the three months ended October 2, ~~2021 versus selected financial information~~2021.

Summary of Selected Financial Data


	(In millions, except per share amounts)
	For The Three Months Ended
	October 1, 2022			October 2, 2021			Increase/ (Decrease)			% Change				% Change Constant Currency
Revenues, net	$	249.7		$	293.5		$	(43.8	)		(14.9	%)			(10.7	%)
Cost of revenues		97.4			115.5			(18.1	)		(15.7	%)			(12.7	%)
Gross profit		152.4			178.0			(25.7	)		(14.4	%)			(9.4	%)
Gross Margin %		61.0	%		60.7	%

Marketing expenses		35.7			34.6			1.1			3.3	%			9.2	%
Selling, general & administrative expenses		58.4			63.7			(5.3	)		(8.3	%)			(5.6	%)
Franchise rights acquired impairments		312.7			—			312.7			100.0	%			100.0	%
Operating (loss) income		(254.5	)		79.7			(334.3	)		(100.0	%)	*		(100.0	%)	*
Operating (Loss) Income Margin %		(101.9	%)		27.2	%

Interest expense		20.9			19.3			1.6			8.4	%			8.4	%
Other expense, net		1.3			0.8			0.6			76.0	%			76.0	%
(Loss) income before income taxes		(276.8	)		59.7			(336.5	)		(100.0	%)	*		(100.0	%)	*

(Benefit from) provision for income taxes		(70.7	)		13.3			(84.1	)		(100.0	%)	*		(100.0	%)	*
Net (loss) income	$	(206.0	)	$	46.3		$	(252.4	)		(100.0	%)	*		(100.0	%)	*

Weighted average diluted shares outstanding		70.4			70.9			(0.5	)		(0.7	%)			(0.7	%)
Diluted (net loss) earnings per share	$	(2.93	)	$	0.65		$	(3.58	)		(100.0	%)	*		(100.0	%)	*

Note: Totals may not sum due to rounding.

*Note: Percentage in excess of 100.0%.

Certain results for the third quarter of fiscal ~~2020 from~~2022 are adjusted to exclude the impact of the $312.7 million of franchise rights acquired impairments and the net impact of the $3.6 million of 2022 plan restructuring charges and the $0.1 million of 2021 plan restructuring charges. See “Non-GAAP Financial Measures” above. The table below sets forth a reconciliation of certain of those components of our selected financial data for the three months ended October 1, 2022 which have been adjusted.


				Gross						Operating
	Gross			Profit			Operating			(Loss) Income
(in millions except percentages)	Profit			Margin			(Loss) Income			Margin
Third Quarter of Fiscal 2022	$	152.4			61.0	%	$	(254.5	)		(101.9	%)
Adjustments to reported amounts (1)
Franchise rights acquired impairments		—						312.7
2022 plan restructuring charges		(0.1	)					3.6
2021 plan restructuring charges		0.1						0.1
Total adjustments (1)		0.0						316.4
Third Quarter of Fiscal 2022, as adjusted (1)	$	152.4			61.0	%	$	61.9			24.8	%

Note: Totals may not sum due to rounding.

(1)

The “As adjusted” measure is a non-GAAP financial measure that adjusts the consolidated statements of net income for the ~~three months ended September 26, 2020.~~third quarter of fiscal 2022 to exclude the impact of the $312.7 million ($235.1 million after tax) of franchise rights acquired impairments and the net impact of the $3.6 million ($2.7 million after tax) of 2022 plan restructuring charges and the $0.1 million ($0.1 million after tax) of 2021 plan restructuring charges. See “Non-GAAP Financial Measures” above for an explanation of our use of non-GAAP financial measures.

~~Summary of Selected Financial Data~~

(In millions, except per share amounts)

For The Three Months Ended

October 2, 2021

September 26, 2020

Increase/
(Decrease)

%
Change

% Change
Constant
Currency

Revenues, net

$
293.5

$
320.7

$
(27.2
)

(8.5
%)

(9.3
%)

Cost of revenues

115.5

130.6

(15.1
)

(11.6
%)

(12.3
%)

Gross profit

178.0

190.1

(12.1
)

(6.3
%)

(7.3
%)

Gross Margin %

60.7
%

59.3
%

Marketing expenses

34.6

38.3

(3.7
)

(9.7
%)

(10.5
%)

Selling, general & administrative
   expenses

63.7

59.2

4.6

7.7
%

6.9
%

Operating income

79.7

92.6

(12.9
)

(13.9
%)

(15.1
%)

Operating Income Margin %

27.2
%

28.9
%

Interest expense

19.3

29.7

(10.5
)

(35.1
%)

(35.1
%)

Other expense (income), net

0.8

(0.2
)

1.0

100.0
%
*

100.0
%
*
Income before income taxes

59.7

63.1

(3.4
)

(5.5
%)

(7.1
%)

Provision for income taxes

13.3

8.6

4.7

55.1
%

51.6
%

Net income

46.3

54.5

(8.2
)

(15.0
%)

(16.4
%)

Net loss attributable to the
   noncontrolling interest

—

0.0

(0.0
)

(100.0
%)

(100.0
%)

Net income attributable to
   WW International, Inc.

$
46.3

$
54.5

$
(8.2
)

(15.0
%)

(16.4
%)

Weighted average diluted shares
   outstanding

70.9

70.0

0.9

1.2
%

1.2
%

Diluted earnings per share

$
0.65

$
0.78

$
(0.13
)

(16.1
%)

(17.4
%)

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

*Note: Percentage in excess of 100.0%.

Certain results for the third quarter of fiscal 2021 are adjusted to exclude the net impact of the $9.3 million of 2021 plan restructuring charges and the reversal of $0.7 million of 2020 plan restructuring charges. See “Non-GAAP Financial Measures” above. The table below sets forth a reconciliation of certain of those components of our selected financial data for the three months ended October 2, 2021 which have been adjusted.


				Gross						Operating
	Gross			Profit			Operating			Income
(in millions except percentages)	Profit			Margin			Income			Margin
Third Quarter of Fiscal 2021	$	178.0			60.7	%	$	79.7			27.2	%
Adjustments to reported amounts (1)
2021 plan restructuring charges		5.6						9.3
2020 plan restructuring charges		(0.7	)					(0.7	)
Total adjustments (1)		4.9						8.6
Third Quarter of Fiscal 2021, as adjusted (1)	$	183.0			62.3	%	$	88.4			30.1	%

Note: Totals may not sum due to rounding.

~~(1)~~

(1)

The “As adjusted” measure is a non-GAAP financial measure that adjusts the consolidated statements of net income for the third quarter of fiscal 2021 to exclude the net impact of the $9.3 million ($7.0 million after tax) of 2021 plan restructuring charges and the reversal of $0.7 million ($0.5 million after tax) ~~of 2020 plan restructuring charges. See “Non-GAAP Financial Measures” above for an explanation of our use of non-GAAP financial measures.~~

~~Certain results for the third quarter of fiscal 2020 are adjusted to exclude the impact of the $2.3 million~~ of 2020 plan restructuring charges. See “Non-GAAP Financial Measures” ~~above. The table below sets forth a reconciliation of certain of those components~~above for an explanation of our ~~selected~~use of non-GAAP financial ~~data for the three months ended September 26, 2020 which have been adjusted.~~

Gross

Operating

Gross

Profit

Operating

Income

(in millions except percentages)

Profit

Margin

Income

Margin

Third Quarter of Fiscal 2020

$
190.1

59.3
%

$
92.6

28.9
%
Adjustments to reported amounts ⁽¹⁾

2020 plan restructuring charges

1.1

2.3

Total adjustments ⁽¹⁾

1.1

2.3

Third Quarter of Fiscal 2020, as adjusted ⁽¹⁾

$
191.2

59.6
%

$
94.9

29.6
%
measures.

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

~~(1)~~

The “As adjusted” measure is a non-GAAP financial measure that adjusts the consolidated statements of net income for the third quarter of fiscal 2020 to exclude the impact of the $2.3 million ($1.7 million after tax) of 2020 plan restructuring charges. See “Non-GAAP Financial Measures” above for an explanation of our use of non-GAAP financial measures.

Consolidated Results

Revenues

Revenues infor the third quarter of fiscal ~~2021~~2022 were ~~$293.5~~$249.7 million, a decrease of ~~$27.2~~$43.8 million, or ~~8.5%~~14.9%, versus the third quarter of fiscal ~~2020.~~2021. Excluding the impact of foreign currency, which ~~positively~~negatively impacted our revenues in the third quarter of fiscal 2022 by $12.4 million, revenues for the third quarter of fiscal ~~2021 by $2.7 million, revenues in the third quarter of fiscal 2021~~2022 would have decreased ~~9.3%~~10.7% versus the prior year period. This decrease was driven primarily by lower ~~revenues related to Workshops + Digital Fees~~Subscription Revenues reflecting lower sign-ups throughout fiscal 2022 primarily due to worsened consumer sentiment and our PersonalPoints program not resonating with consumers to the ~~impact~~extent anticipated. This worsened consumer sentiment in fiscal 2022 was due in part to the evolution of the COVID-19 ~~environment.~~pandemic as well as the likely impact of certain macro factors including increasing inflation, social and political unrest and challenged economic growth. See “—Segment Results” for additional details on revenues.

Cost of Revenues ~~and Gross Profit~~

Total cost of revenues for the third quarter of fiscal 2022 decreased $18.1 million, or 15.7%, versus the third quarter of fiscal 2021. Excluding the impact of foreign currency, which decreased cost of revenues in the third quarter of fiscal ~~2021~~2022 by $3.5 million, cost of revenues for the third quarter of fiscal 2022 would have decreased ~~$15.1 million, or 11.6%,~~12.7% versus the prior year period. Excluding the net impact of the $0.0 million of restructuring charges in the third quarter of fiscal 2022 and the net impact of the $4.9 million of restructuring charges in the third quarter of fiscal 2021, ~~and~~total cost of revenues for the third quarter of fiscal 2022 would have decreased by 11.9%, or 8.8% on a constant currency basis, versus the prior year period.

Gross Profit

Gross profit for the third quarter of fiscal 2022 decreased $25.7 million, or 14.4%, versus the third quarter of fiscal 2021. Excluding the impact of foreign currency, which negatively impacted gross profit in the ~~$1.1~~third quarter of fiscal 2022 by $9.0 million, gross profit for the third quarter of fiscal 2022 would have decreased 9.4% versus the prior year period. Excluding the net impact of the $0.0 million of restructuring charges in the third quarter of fiscal 2020, total cost of revenues in the third quarter of fiscal 2021 would have decreased by 14.7%, or 15.4% on a constant currency basis, versus the prior year period. Gross profit decreased $12.1 million, or 6.3%, in the third quarter of fiscal 2021 compared to the third quarter of fiscal 2020. Excluding the impact of foreign currency, which positively impacted gross profit for the third quarter of fiscal 2021 by $1.8 million, gross profit in the third quarter of fiscal 2021 would have decreased 7.3% versus the prior year period. Excluding2022 and the net impact of the $4.9 million of restructuring charges in the third quarter of fiscal 2021, ~~and the impact of the $1.1 million of restructuring charges in~~gross profit for the third quarter of fiscal ~~2020, gross profit in the third quarter of fiscal 2021~~2022 would have decreased by ~~4.3%~~16.7%, or ~~5.2%~~11.8% on a constant currency basis, versus the prior year period primarily due to the decrease in revenues. Gross margin infor the third quarter of fiscal ~~2021~~2022 increased ~~1.4%~~ to 61.0% versus 60.7% ~~versus 59.3% in~~for the third quarter of fiscal ~~2020.~~2021. Excluding the impact of foreign currency, gross margin in the third quarter of fiscal ~~2021~~2022 would have increased ~~1.3%~~0.9% to ~~60.6%~~61.5% versus the prior year period. Excluding the net impact of restructuring charges in the third quarter of fiscal ~~2021~~2022 and the net impact of restructuring charges in the third quarter of fiscal ~~2020,~~2021, gross margin for the third quarter of fiscal 2022 would have decreased 1.3% to 61.0% versus the prior year period. Excluding the impact of foreign currency, the net impact of restructuring charges in the third quarter of fiscal 2022 and the net impact of restructuring charges in the third quarter of fiscal 2021, gross margin for the third quarter of fiscal 2022 would have ~~increased 2.7%~~decreased 0.8% to ~~62.3%~~61.5% versus the prior year ~~period, both as reported and on a constant currency basis. Gross~~period. The gross margin ~~increase~~decrease was driven primarily by a revenue mix shift toaway from our higher margin Digital business ~~partially offset by an increase in fixed costs related~~ to our lower margin Workshops + Digital ~~360.~~business.

Marketing

Marketing expenses for the third quarter of fiscal 2022 increased $1.1 million, or 3.3%, versus the third quarter of fiscal 2021. Excluding the impact of foreign currency, which decreased marketing expenses in the third quarter of fiscal ~~2021 decreased $3.7~~2022 by $2.1 million, ~~or 9.7%, versus the third quarter of fiscal 2020. Excluding the impact of foreign currency, which increased~~ marketing expenses for the third quarter of fiscal ~~2021 by $0.3 million, marketing expenses in the third quarter of fiscal 2021~~2022 would have ~~decreased 10.5%~~increased 9.2% versus the ~~third quarter of fiscal 2020.~~prior year period. This ~~decrease~~increase in marketing expenses was primarily due to ~~a decline~~an increase in online, social and TV media ~~spending, partially offset by higher spending in online and social media.~~spend. Marketing expenses as a percentage of revenue for the third quarter of fiscal ~~2021 decreased~~2022 increased to ~~11.8%~~14.3% from ~~11.9%~~11.8% for the third quarter of fiscal ~~2020.~~2021.

Selling, General and Administrative

Selling, general and administrative expenses for the third quarter of fiscal 2022 decreased $5.3 million, or 8.3%, versus the third quarter of fiscal 2021. Excluding the impact of foreign currency, which decreased selling, general and administrative expenses in the third quarter of fiscal ~~2021 increased $4.6~~2022 by $1.7 million, ~~or 7.7%, versus the third quarter of fiscal 2020. Excluding the impact of foreign currency, which increased~~ selling, general and administrative expenses for the third quarter of fiscal ~~2021 by $0.4~~2022 would have decreased 5.6% versus the prior year period. Excluding the net impact of the $3.7 million ~~selling, general and administrative expenses~~of restructuring charges in the third quarter of fiscal ~~2021 would have increased 6.9% versus~~2022 and the ~~prior year period. Excluding the~~net impact of the $3.7 million of restructuring charges in the third quarter of fiscal 2021, selling, general and ~~the impact of the $1.2 million of restructuring charges in~~administrative expenses for the third quarter of fiscal ~~2020, selling, general and administrative expenses in the third quarter of fiscal 2021~~2022 would have ~~increased~~decreased by ~~3.5%~~8.7%, or ~~2.7%~~5.8% on a constant currency basis, versus the prior year period. This decrease in selling, general and administrative expenses was primarily due to an increase in capitalizable projects, lower salary costs and lower legal and professional fees. Selling, general and administrative expenses as a percentage of revenue for the third quarter of fiscal ~~2021~~2022 increased to ~~21.7%~~23.4% from ~~18.5%~~21.7% for the third quarter of fiscal ~~2020.~~

~~Operating Income~~

~~Operating income~~2021. Excluding the net impact of restructuring charges in the third quarter of fiscal 2022 and the net impact of restructuring charges in the third quarter of fiscal 2021, ~~decreased $12.9 million,~~selling, general and administrative expenses as a percentage of revenue for the third quarter of fiscal 2022 would have increased by 1.5%, or ~~13.9%,~~1.1% on a constant currency basis, versus the prior year period. ~~Excluding~~

Impairment

In performing our interim impairment analysis as of October 1, 2022, we determined that the ~~impact~~carrying amounts of ~~foreign currency, which positively impacted~~our United States, Canada and New Zealand franchise rights acquired with indefinite-lived units of account exceeded their respective fair values and, as a result, we recorded impairment charges for our United States, Canada and New Zealand units of account of $298.3 million, $13.3 million and $1.1 million, respectively, in the third quarter of fiscal 2022.

Operating (Loss) Income

Operating loss for the third quarter of fiscal 2022 was $254.5 million compared to operating income for the third quarter of fiscal 2021 of $79.7 million. Operating loss for the third quarter of fiscal 2022 was negatively impacted by ~~$1.0~~$4.3 million ~~operating income~~of foreign currency. Excluding the impact of the $312.7 million of franchise rights acquired impairments in third quarter of fiscal 2022, the net impact of the $3.7 million of restructuring charges in the third quarter of fiscal ~~2021 would have decreased 15.1% versus the prior year period. Excluding~~2022 and the net impact of the $8.6 million of restructuring charges in the third quarter of fiscal 2021, ~~and~~operating income would have been $61.9 million for the third quarter of fiscal 2022, a decrease of 30.0%, or 24.1% on a constant currency basis, versus operating income in the prior year period. Operating loss margin for the third quarter of fiscal 2022 was 101.9% compared to operating income margin for the third quarter of fiscal 2021 of 27.2%. Excluding the impact of the ~~$2.3 million~~franchise rights acquired impairments in the third quarter of fiscal 2022, the net impact of restructuring charges in the third quarter of fiscal 2020, operating income in the third quarter of fiscal 2021 would have decreased by 6.9%, or 8.0% on a constant currency basis, versus the prior year period. Operating income margin in the third quarter of fiscal 2021 decreased 1.7% to 27.2% versus 28.9% in the third quarter of fiscal 2020. Excluding2022 and the net impact of restructuring charges in the third quarter of fiscal 2021, ~~and the impact of restructuring charges in~~operating income margin would have been 24.8% for the third quarter of fiscal ~~2020, operating income margin in the third quarter~~2022, a decrease of ~~fiscal 2021 would have increased by 0.5%~~5.3%, or ~~0.4%~~4.5% on a constant currency basis, versus operating income margin in the prior year period. This ~~increase~~decrease in operating income margin was driven ~~primarily~~ by an increase in ~~gross margin, largely offset by~~marketing expenses as a percentage of revenue, an increase in selling, general and administrative expenses as a percentage of revenue and a decrease in gross margin versus the prior year period.

Interest Expense

Interest expense infor the third quarter of fiscal ~~2021 decreased $10.5~~2022 increased $1.6 million, or ~~35.1%~~8.4%, versus the third quarter of fiscal ~~2020.~~2021. The ~~decrease~~increase in interest expense was driven primarily by ~~lower~~ ~~interest rates under~~an increase in the base rate of our ~~New~~ Term Loan Facility (as defined below) ~~and on our Senior Secured Notes (as defined below) as a result of our April 2021 debt refinancing (as defined below)~~. The effective interest rate on our debt, based on interest incurred (which includes amortization of our deferred financing costs and debt discount) and our average borrowings during the third quarter of fiscal ~~2021~~2022 and the third quarter of fiscal ~~2020~~2021 and excluding the impact of our interest rate swaps then in effect, ~~decreased~~increased to 5.68% per annum at the end of the third quarter of fiscal 2022 from 4.69% per annum at the end of the third quarter of fiscal ~~2021 from 6.57% per annum at the end of the third quarter of fiscal 2020.~~2021. Including the impact of our interest rate swaps then in effect, the effective interest rate on our debt, based on interest incurred (which includes amortization of our deferred financing costs and debt discount) and our average borrowings during the third quarter of fiscal ~~2021~~2022 and the third quarter of fiscal ~~2020, decreased~~2021, increased to 5.77% per annum at the end of the third quarter of fiscal 2022 from 5.29% per annum at the end of the third quarter of fiscal ~~2021 from 7.53% per annum at the end of the third quarter of fiscal 2020.~~ 2021. See “—Liquidity and Capital Resources—Long-Term Debt” for additional details regarding our debt, including interest rates and payments thereon. For additional details on our interest rate 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

Other expense, ~~(income),~~ net, which consists primarily of the impact of foreign currency on intercompany transactions, ~~changed~~increased by ~~$1.0~~$0.6 million infor the third quarter of fiscal ~~2021~~2022 to ~~$0.8~~$1.3 million of expense as compared to ~~$0.2~~$0.8 million of ~~income in~~expense for the ~~prior year period.~~third quarter of fiscal 2021.

Tax

Our effective tax rate for the third quarter of fiscal ~~2021~~2022 was ~~22.4%~~25.6% as compared to ~~13.6%~~22.4% for the third quarter of fiscal ~~2020.~~ 2021. The tax benefit for the third quarter of fiscal 2022 was impacted by a U.S. state tax rate change. For the third quarter of fiscal 2022, the difference between the U.S. federal statutory tax rate and our consolidated effective tax rate was primarily due to state income tax expense and tax expense from income earned in foreign jurisdictions, partially offset by a tax benefit related to foreign-derived intangible income, or FDII.The tax expense infor the third quarter of fiscal 2021 was impacted by the reversal of a valuation allowance related to tax benefits for foreign losses that are now expected to be realized. For the third quarter of fiscal 2021, the difference between the U.S. federal statutory tax rate and our consolidated effective tax rate was primarily due to state income tax expense and tax expense from income earned in foreign jurisdictions, partially offset by a tax benefit related to ~~foreign-derived intangible income,~~FDII.

We continue to evaluate the realizability of our deferred tax assets and if our U.S. business continues to decline, it is possible that some or ~~FDII. The~~all of the business interest expense carryforward may not be used. While this carryforward has an indefinite life, a change in the valuation allowance is possible in the foreseeable future which could materially increase our tax expense in the period the valuation allowance is recognized.

Net (Loss) Income and Diluted (Net Loss) Earnings Per Share

Net loss for the third quarter of fiscal ~~2020~~2022 was ~~impacted by~~ ~~a tax benefit related~~$206.0 million compared to ~~the reversal of the fiscal 2018, fiscal 2019 and fiscal 2020 tax impact of global intangible low-taxed income, or GILTI. For the third quarter of fiscal 2020, the difference between the U.S. federal statutory tax rate and our consolidated effective tax rate was primarily due to~~ ~~tax expense from income earned in foreign jurisdictions and state income tax expense, partially offset by a tax benefit related to FDII.~~

~~Net Income Attributable to the Company and Earnings Per Share~~

~~Net income attributable to the Company in the~~ ~~third quarter of fiscal 2021 was $46.3 million, which~~ ~~reflected an~~ ~~$8.2 million, or 15.0%, decrease from the~~ ~~third quarter of fiscal 2020~~. ~~Excluding the impact of foreign currency, which positively impacted~~ net income ~~attributable to the Company in~~for the third quarter of fiscal 2021 ~~by $0.7 million, net income attributable to the Company in~~of $46.3 million. Net loss for the third quarter of fiscal ~~2021 would have decreased 16.4% from~~2022 was negatively impacted by $2.7 million of foreign currency. Net loss for the third quarter of fiscal ~~2020.~~ 2022 included a $235.1 million impact from the franchise rights acquired impairments and a $2.7 million net impact from restructuring charges. Net income ~~attributable to~~for the ~~Company in the~~ third quarter of fiscal 2021 included a $6.5 million net impact from restructuring charges.

~~Net income attributable to~~

Diluted net loss per share for the ~~Company in the~~ third quarter of fiscal ~~2020 included a $1.7 million impact from restructuring charges.~~

~~Earnings~~2022 was $2.93 compared to earnings per fully diluted share, or EPS, inof $0.65 for the third quarter of fiscal ~~2021 was $0.65 compared to $0.78 in~~2021. Diluted net loss per share for the third quarter of fiscal ~~2020.~~2022 included a $3.34 impact from the franchise rights acquired impairments and a $0.04 net impact from restructuring charges. EPS infor the third quarter of fiscal 2021 included a ~~$0.09~~$0.09 net impact from restructuring charges. Additionally, EPS infor the third quarter of fiscal 2021 included a $0.02 tax benefit due to the reversal of a valuation allowance related to foreign losses that are now expected to be realized. EPS in the third quarter of fiscal 2020 included a $0.02 impact from restructuring charges. Additionally, EPS in the third quarter of fiscal 2020 included an $0.11 tax benefit related to the reversal of the fiscal 2018 and fiscal 2019 tax impact of GILTI.

Segment Results

Metrics and Business Trends

The following tables set forth key metrics by reportable segment for the third quarter of fiscal ~~2021~~2022 and the percentage change in those metrics versus the prior year period:

(in millions except percentages and as noted)

	Q3 2021
	GAAP									Constant Currency
				Product									Product						Total									Q3 2022
	Subscription			Sales &			Total			Subscription			Sales &			Total			Paid			Incoming			EOP			GAAP									Constant Currency
	Revenues			Other			Revenues			Revenues			Other			Revenues			Weeks			Subscribers			Subscribers			Subscription Revenues			Product Sales & Other			Total Revenues			Subscription Revenues			Product Sales & Other			Total Revenues			Total Paid Weeks			Incoming Subscribers			EOP Subscribers
																						(in thousands)																											(in thousands)
North America	$	176.7		$	21.1		$	197.8		$	176.1		$	21.0		$	197.1			39.3			3,158.4			2,919.1		$	154.8		$	21.2		$	176.1		$	155.2		$	21.3		$	176.5			34.0			2,805.1			2,463.8
CE		65.3			6.7			71.9			64.5			6.6			71.1			15.5			1,273.9			1,155.3			51.2			5.3			56.5			60.0			6.2			66.2			13.6			1,118.9			1,009.7
UK		13.5			2.1			15.7			12.7			2.0			14.7			4.0			337.3			292.6			9.5			1.4			10.9			11.1			1.7			12.8			3.2			254.8			234.0
Other ⁽¹⁾		6.9			1.2			8.1			6.7			1.2			7.9			1.2			98.2			96.7			5.2			1.0			6.2			5.6			1.1			6.7			1.1			88.7			86.1
Total	$	262.4		$	31.1		$	293.5		$	260.0		$	30.8		$	290.8			60.1			4,867.7			4,463.7		$	220.7		$	29.0		$	249.7		$	231.9		$	30.2		$	262.2			51.9			4,267.5			3,793.6

	% Change Q3 2021 vs. Q3 2020																											% Change Q3 2022 vs. Q3 2021
North America		(7.6	%)		(12.1	%)		(8.1	%)		(7.9	%)		(12.5	%)		(8.4	%)		(2.0	%)		(1.6	%)		(2.4	%)		(12.4	%)		0.8	%		(11.0	%)		(12.2	%)		1.0	%		(10.8	%)		(13.5	%)		(11.2	%)		(15.6	%)
CE		(3.3	%)		(25.9	%)		(6.0	%)		(4.4	%)		(26.3	%)		(7.0	%)		(1.7	%)		0.1	%		(4.2	%)		(21.5	%)		(20.9	%)		(21.5	%)		(8.0	%)		(7.1	%)		(8.0	%)		(12.5	%)		(12.2	%)		(12.6	%)
UK		(19.2	%)		(42.9	%)		(23.5	%)		(24.3	%)		(46.5	%)		(28.3	%)		(19.0	%)		(12.1	%)		(20.5	%)		(30.1	%)		(32.4	%)		(30.4	%)		(18.2	%)		(20.9	%)		(18.6	%)		(20.1	%)		(24.4	%)		(20.0	%)
Other ⁽¹⁾		0.6	%		(27.0	%)		(4.9	%)		(2.2	%)		(28.7	%)		(7.5	%)		0.4	%		0.6	%		(1.2	%)		(23.9	%)		(17.5	%)		(22.9	%)		(18.0	%)		(13.0	%)		(17.2	%)		(11.1	%)		(9.6	%)		(11.0	%)
Total		(7.1	%)		(19.0	%)		(8.5	%)		(7.9	%)		(19.8	%)		(9.3	%)		(3.2	%)		(1.9	%)		(4.3	%)		(15.9	%)		(6.8	%)		(14.9	%)		(11.6	%)		(2.8	%)		(10.7	%)		(13.6	%)		(12.3	%)		(15.0	%)

Note: Totals may not sum due to rounding.

(1)

Represents Australia, New Zealand and emerging markets operations and franchise revenues.

~~(1)~~

~~Represents Australia, New Zealand and emerging markets operations and franchise revenues.~~

(in millions except percentages and as noted)

	Q3 2021
	Digital Subscription Revenues						Digital			Incoming			EOP			Workshops + Digital Fees						Workshops + Digital			Incoming Workshops			EOP Workshops			Q3 2022
				Constant			Paid			Digital		��	Digital						Constant			Paid			+ Digital			+ Digital			Digital Subscription Revenues															Workshops + Digital Fees
	GAAP			Currency			Weeks			Subscribers			Subscribers			GAAP			Currency			Weeks			Subscribers			Subscribers			GAAP			Constant Currency			Digital Paid Weeks			Incoming Digital Subscribers			EOP Digital Subscribers			GAAP			Constant Currency			Workshops + Digital Paid Weeks			Incoming Workshops + Digital Subscribers			EOP Workshops + Digital Subscribers
										(in thousands)															(in thousands)															(in thousands)															(in thousands)
North America	$	125.1		$	124.6			32.0			2,604.5			2,342.2		$	51.7		$	51.5			7.3			554.0			576.8		$	102.7		$	103.0			26.3			2,174.6			1,908.4		$	52.1		$	52.2			7.8			630.5			555.4
CE		56.5			55.9			14.3			1,179.6			1,063.0			8.7			8.6			1.2			94.3			92.2			43.6			51.1			12.1			1,009.8			898.1			7.6			8.9			1.5			109.1			111.6
UK		9.0			8.4			3.0			260.7			219.0			4.5			4.2			1.0			76.5			73.6			5.7			6.7			2.3			182.8			168.6			3.8			4.4			0.9			72.0			65.4
Other ⁽¹⁾		4.7			4.5			1.0			74.8			76.6			2.2			2.1			0.3			23.4			20.1			3.8			4.1			0.9			72.8			70.9			1.4			1.5			0.2			15.9			15.2
Total	$	195.3		$	193.4			50.3			4,119.5			3,700.9		$	67.1		$	66.6			9.8			748.2			762.8		$	155.9		$	164.9			41.6			3,440.0			3,046.1		$	64.9		$	67.0			10.3			827.6			747.6

	% Change Q3 2021 vs. Q3 2020																														% Change Q3 2022 vs. Q3 2021
North America		2.4	%		2.0	%		0.6	%		5.2	%		(3.1	%)		(25.3	%)		(25.4	%)		(12.0	%)		(24.5	%)		0.5	%		(17.9	%)		(17.7	%)		(17.8	%)		(16.5	%)		(18.5	%)		0.9	%		1.1	%		5.7	%		13.8	%		(3.7	%)
CE		6.2	%		5.0	%		3.5	%		6.8	%		(0.2	%)		(38.9	%)		(39.5	%)		(39.1	%)		(43.8	%)		(34.8	%)		(22.8	%)		(9.6	%)		(15.5	%)		(14.4	%)		(15.5	%)		(13.1	%)		1.9	%		23.8	%		15.7	%		21.0	%
UK		(2.4	%)		(8.6	%)		(10.4	%)		4.3	%		(14.4	%)		(39.7	%)		(43.5	%)		(37.4	%)		(42.8	%)		(34.4	%)		(36.8	%)		(26.0	%)		(24.4	%)		(29.9	%)		(23.0	%)		(16.9	%)		(2.7	%)		(7.0	%)		(5.9	%)		(11.1	%)
Other ⁽¹⁾		12.2	%		9.4	%		6.1	%		7.3	%		5.7	%		(17.6	%)		(20.3	%)		(15.3	%)		(16.1	%)		(21.1	%)		(18.2	%)		(11.9	%)		(6.0	%)		(2.6	%)		(7.5	%)		(36.2	%)		(31.0	%)		(28.8	%)		(32.0	%)		(24.3	%)
Total		3.5	%		2.5	%		0.8	%		5.6	%		(2.8	%)		(28.3	%)		(28.9	%)		(19.7	%)		(29.6	%)		(10.6	%)		(20.2	%)		(15.6	%)		(17.3	%)		(16.5	%)		(17.7	%)		(3.3	%)		(0.1	%)		5.6	%		10.6	%		(2.0	%)

Note: Totals may not sum due to rounding.

~~(1)~~

~~Represents Australia, New Zealand and emerging markets operations and franchise revenues~~.

(1)

Represents Australia, New Zealand and emerging markets operations and franchise revenues.

North America Performance

The decrease in North America revenues infor the third quarter of fiscal 2022 versus the prior year period was driven by a decrease in Subscription Revenues. The decrease in Subscription Revenues for the third quarter of fiscal 2022 versus the prior year period was driven by a decrease in Digital Subscription Revenues. Digital Subscription Revenues were negatively impacted by both the lower number of Incoming Digital Subscribers at the beginning of the third quarter of fiscal 2022 versus the beginning of the third quarter of fiscal 2021 and the recruitment decline during the third quarter of fiscal 2022 as compared to the prior year period. This decline in recruitments was driven primarily by worsened consumer sentiment in the current environment and our PersonalPoints program not resonating with consumers to the extent anticipated. The decrease in North America Total Paid Weeks for the third quarter of fiscal 2022 versus the prior year period was driven primarily by both the lower number of Total Incoming Subscribers at the beginning of the third quarter of fiscal 2022 versus the beginning of the third quarter of fiscal 2021 and lower recruitments for the third quarter of fiscal 2022 versus the prior year period. For the third quarter of fiscal 2022, Workshops + Digital Fees, Workshops + Digital Paid Weeks and End of Period Workshops + Digital Subscribers all substantially benefited from the transition of our former Digital 360 members from the Digital business to the Workshops + Digital business during the second and third quarters of fiscal 2022 as previously disclosed.

The slight increase in North America product sales and other for the third quarter of fiscal 2022 versus the prior year period was driven primarily by an increase in licensing, partially offset by a decrease in product sales.

Continental Europe Performance

The decrease in Continental Europe revenues for the third quarter of fiscal 2022 versus the prior year period was driven primarily by a decrease in Subscription Revenues. The decrease in Subscription Revenues infor the third quarter of fiscal ~~2021~~2022 versus the prior year period was driven by a decrease in ~~Workshops + Digital Fees, partially offset by an increase in~~ Digital Subscription Revenues. ~~Workshops +~~ Digital ~~Fees~~Subscription Revenues were negatively impacted by both the ~~significant decline in the~~lower number of Incoming ~~Workshops +~~ Digital Subscribers at the beginning of the third quarter of fiscal ~~2021~~2022 versus the beginning of the third quarter of fiscal ~~2020due to~~2021 and the ~~impact of the COVID-19 environment.~~ ~~The decrease in North America Total Paid Weeks in~~recruitment decline during the third quarter of fiscal ~~2021~~2022 as compared to the prior year period. This decline in recruitments was driven primarily by worsened consumer sentiment in the current environment and our PersonalPoints program not resonating with consumers to the extent anticipated. The decrease in Continental Europe Total Paid Weeks for the third quarter of fiscal 2022 versus the prior year period was driven primarily by both lower recruitments for the third quarter of fiscal 2022 versus the prior year period and the lower number of Total Incoming ~~Workshops + Digital~~ Subscribers at the beginning of the third quarter of fiscal ~~2021~~2022 versus the beginning of the third quarter of fiscal ~~2020~~2021.

The decrease in Continental Europe product sales and ~~lower Digital recruitments in~~other for the third quarter of fiscal ~~2021 versus the prior year period.~~

~~The decrease in North America product sales and other in the third quarter of fiscal 2021~~2022 versus the prior year period was driven primarily by a decrease in product ~~sales and licensing.~~sales.

~~Continental Europe~~United Kingdom Performance

The decrease in ~~Continental Europe~~UK revenues infor the third quarter of fiscal 2022 versus the prior year period was driven primarily by a decrease in Subscription Revenues. The decrease in Subscription Revenues for the third quarter of fiscal 2022 versus the prior year period was driven primarily by a decrease in Digital Subscription Revenues. Digital Subscription Revenues were negatively impacted by both the lower number of Incoming Digital Subscribers at the beginning of the third quarter of fiscal 2022 versus the beginning of the third quarter of fiscal 2021 and the recruitment decline during the third quarter of fiscal 2022 as compared to the prior year period. This decline in recruitments was driven primarily by worsened consumer sentiment in the current environment and our PersonalPoints program not resonating with consumers to the extent anticipated. The decrease in UK Total Paid Weeks for the third quarter of fiscal 2022 versus the prior year period was driven primarily by both the lower number of Total Incoming Subscribers at the beginning of the third quarter of fiscal 2022 versus the beginning of the third quarter of fiscal 2021 and lower recruitments for the third quarter of fiscal 2022 versus the prior year period.

The decrease in UK product sales and other for the third quarter of fiscal 2022 versus the prior year period was driven primarily by a decrease in e-commerce product sales.

Other Performance

The decrease in Other revenues for the third quarter of fiscal 2022 versus the prior year period was driven primarily by a decrease in Subscription Revenues. The decrease in Subscription Revenues for the third quarter of fiscal 2022 versus the prior year period was driven by both a decrease in ~~Subscription Revenues~~Workshops + Digital Fees and a decrease in product sales and other. The decrease in Subscription Revenues in the third quarter of fiscal 2021 versus the prior year period was driven by a decrease in Workshops + Digital Fees, partially offset by an increase in Digital Subscription Revenues. ~~Workshops + Digital Fees~~Subscription Revenues were negatively impacted by both the ~~significant decline in the~~lower number of Total Incoming ~~Workshops + Digital~~ Subscribers at the beginning of the third quarter of fiscal ~~2021~~2022 versus the beginning of the third quarter of fiscal ~~2020due to~~2021 and the ~~impact of the COVID-19 environment. The decrease in Continental Europe Total Paid Weeks in~~recruitment decline during the third quarter of fiscal ~~2021 versus~~2022 as compared to the prior year ~~period~~period. This decline in recruitments was driven primarily by worsened consumer sentiment in the ~~lower number of~~ ~~Incoming Workshops + Digital Subscribers at~~current environment and our PersonalPoints program not resonating with consumers to the ~~beginning of~~extent anticipated.

The decrease in Other product sales and other for the third quarter of fiscal ~~2021 versus the beginning of the third quarter of fiscal 2020~~ ~~and lower Digital recruitments in the third quarter of fiscal 2021 versus the prior year period.~~

~~The decrease in Continental Europe product sales and other in the third quarter of fiscal 2021~~2022 versus the prior year period was driven primarily by a decrease in e-commerce product sales.

~~United Kingdom Performance~~

The decrease in UK revenues in the third quarter of fiscal 2021 versus the prior year period was driven by a decrease in Subscription Revenues and, to a lesser extent, a decrease in product sales and other. The decrease in Subscription Revenues in the third quarter of fiscal 2021 versus the prior year period was driven primarily by a decrease in Workshops + Digital Fees. Workshops + Digital Fees were negatively impacted by the significant decline in the number of Incoming Workshops + Digital Subscribers at the beginning of the third quarter of fiscal 2021 versus the beginning of the third quarter of fiscal 2020due to the impact of the COVID-19 environment. The decrease in UK Total Paid Weeks in the third quarter of fiscal 2021 versus the prior year period was driven primarily by the lower number of Incoming Workshops + Digital Subscribers at the beginning of the third quarter of fiscal 2021 versus the beginning of the third quarter of fiscal 2020 ~~and lower Digital recruitments in the third quarter of fiscal 2021 versus the prior year period.~~

~~The decrease in UK product sales and other in the third quarter of fiscal 2021 versus the prior year period was driven primarily by a decrease in product sales.~~

~~Other Performance~~

The decrease in Other revenues in the third quarter of fiscal 2021 versus the prior year period was driven primarily by a decrease in product sales and other. The slight increase in Subscription Revenues in the third quarter of fiscal 2021 versus the prior year period was driven by the impact of foreign currency. Excluding foreign currency, Other Subscription Revenues in the third quarter of fiscal 2021 would have decreased versus the prior year period driven by a decrease in Workshops + Digital Fees, partially offset by an increase in Digital Subscription Revenues. Workshops + Digital Fees were negatively impacted by the significant decline in the number of Incoming Workshops + Digital Subscribers at the beginning of the third quarter of fiscal 2021 versus the beginning of the third quarter of fiscal 202040~~due to the impact of the COVID-19 environment.~~

~~The decrease in Other product sales and other in the third quarter of fiscal 2021 versus the prior year period was driven primarily by decreases in franchise commissions and product sales.~~

RESULTS OF OPERATIONS

NINE MONTHS ENDED OCTOBER ~~2, 2021~~1, 2022 COMPARED TO THE NINE MONTHS ENDED ~~SEPTEMBER 26, 2020~~OCTOBER 2, 2021

The table below sets forth selected financial information for the first nine months of fiscal 2022 from our consolidated statements of net income for the nine months ended October 1, 2022 versus selected financial information for the first nine months of fiscal 2021 from our consolidated statements of net income for the nine months ended October 2, ~~2021 versus selected financial information~~2021.

Summary of Selected Financial Data


	(In millions, except per share amounts)
	For The Nine Months Ended
	October 1, 2022			October 2, 2021			Increase/ (Decrease)			% Change				% Change Constant Currency
Revenues, net	$	816.9		$	936.7		$	(119.7	)		(12.8	%)			(9.6	%)
Cost of revenues		321.5			379.2			(57.7	)		(15.2	%)			(13.0	%)
Gross profit		495.4			557.5			(62.1	)		(11.1	%)			(7.3	%)
Gross Margin %		60.6	%		59.5	%

Marketing expenses		195.1			208.7			(13.5	)		(6.5	%)			(3.6	%)
Selling, general & administrative expenses		193.3			206.6			(13.3	)		(6.4	%)			(4.5	%)
Franchise rights acquired and goodwill impairments		339.2			—			339.2			100.0	%			100.0	%
Operating (loss) income		(232.2	)		142.2			(374.4	)		(100.0	%)	*		(100.0	%)	*
Operating (Loss) Income Margin %		(28.4	%)		15.2	%

Interest expense		58.8			68.7			(9.9	)		(14.4	%)			(14.4	%)
Other expense, net		3.3			0.9			2.4			100.0	%	*		100.0	%	*
Early extinguishment of debt		—			29.2			(29.2	)		(100.0	%)			(100.0	%)
(Loss) income before income taxes		(294.3	)		43.5			(337.8	)		(100.0	%)	*		(100.0	%)	*

(Benefit from) provision for income taxes		(75.4	)		6.5			(81.9	)		(100.0	%)	*		(100.0	%)	*
Net (loss) income	$	(218.9	)	$	37.0		$	(255.9	)		(100.0	%)	*		(100.0	%)	*

Weighted average diluted shares outstanding		70.3			70.9			(0.6	)		(0.9	%)			(0.9	%)
Diluted (net loss) earnings per share	$	(3.12	)	$	0.52		$	(3.64	)		(100.0	%)	*		(100.0	%)	*

Note: Totals may not sum due to rounding.

*Note: Percentage in excess of 100.0%.

Certain results for the first nine months of fiscal 2022 are adjusted to exclude the impact of the $339.2 million of franchise rights acquired and goodwill impairments and the net impact of the $22.7 million of 2022 plan restructuring charges, the reversal of $0.2 million of 2021 plan restructuring charges and the reversal of $0.1 million of 2020 ~~from~~plan restructuring charges. See “Non-GAAP Financial Measures” above. The table below sets forth a reconciliation of certain of those components of our selected financial data for the first nine months ended October 1, 2022 which have been adjusted.


				Gross						Operating
	Gross			Profit			Operating			(Loss) Income
(in millions except percentages)	Profit			Margin			(Loss) Income			Margin
First Nine Months of Fiscal 2022	$	495.4			60.6	%	$	(232.2	)		(28.4	%)
Adjustments to reported amounts (1)
Franchise rights acquired and goodwill impairments		—						339.2
2022 plan restructuring charges		4.4						22.7
2021 plan restructuring charges		(0.4	)					(0.2	)
2020 plan restructuring charges		(0.1	)					(0.1	)
Total adjustments (1)		3.9						361.5
First Nine Months of Fiscal 2022, as adjusted (1)	$	499.3			61.1	%	$	129.3			15.8	%

Note: Totals may not sum due to rounding.

(1)

The “As adjusted” measure is a non-GAAP financial measure that adjusts the consolidated statements of net income for the first nine months ~~ended September 26, 2020.~~of fiscal 2022 to exclude the impact of the $339.2 million ($256.4 million after tax) of franchise rights acquired and goodwill impairments and the net impact of the $22.7 million ($17.0 million after tax) of 2022 plan restructuring charges, the reversal of $0.2 million ($0.1 million after tax) of 2021 plan restructuring charges and the reversal of $0.1 million ($0.1 million after tax) of 2020 plan restructuring charges. See “Non-GAAP Financial Measures” above for an explanation of our use of non-GAAP financial measures.

~~Summary of Selected Financial Data~~

(In millions, except per share amounts)

For The Nine Months Ended

October 2, 2021

September 26, 2020

Increase/
(Decrease)

%
Change

% Change
Constant
Currency

Revenues, net

$
936.7

$
1,054.7

$
(118.0
)

(11.2
%)

(13.6
%)

Cost of revenues

379.2

458.9

(79.8
)

(17.4
%)

(19.1
%)

Gross profit

557.5

595.8

(38.3
)

(6.4
%)

(9.3
%)

Gross Margin %

59.5
%

56.5
%

Marketing expenses

208.7

198.1

10.6

5.3
%

2.0
%

Selling, general & administrative
   expenses

206.6

225.5

(18.9
)

(8.4
%)

(9.9
%)

Goodwill impairment

—

3.7

(3.7
)

(100.0
%)

(100.0
%)

Operating income

142.2

168.5

(26.3
)

(15.6
%)

(20.0
%)

Operating Income Margin %

15.2
%

16.0
%

Interest expense

68.7

92.3

(23.6
)

(25.6
%)

(25.6
%)

Other expense, net

0.9

0.2

0.7

100.0
%
*
100.0
%
*
Early extinguishment of debt

29.2

0.0

29.2

100.0
%

100.0
%

Income before income taxes

43.5

76.0

(32.5
)

(42.8
%)

(52.5
%)

Provision for income taxes

6.5

13.5

(7.1
)

(52.1
%)

(67.6
%)

Net income

37.0

62.4

(25.5
)

(40.8
%)

(49.3
%)

Net loss attributable to the
   noncontrolling interest

—

0.0

(0.0
)

(100.0
%)

(100.0
%)

Net income attributable to
   WW International, Inc.

$
37.0

$
62.5

$
(25.5
)

(40.8
%)

(49.3
%)

Weighted average diluted shares
   outstanding

70.9

69.9

0.9

1.3
%

1.3
%

Diluted earnings per share

$
0.52

$
0.89

$
(0.37
)

(41.6
%)

(50.0
%)

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

*Note: Percentage in excess of 100.0%.

Certain results for the first nine months of fiscal 2021 are adjusted to exclude the net impact of the $20.9 million of 2021 plan restructuring charges and the reversal of $1.5 million of 2020 plan restructuring charges. See “Non-GAAP Financial Measures” above. The table below sets forth a reconciliation of certain of those components of our selected financial data for the first nine months ended October 2, 2021 which have been adjusted.


				Gross						Operating
	Gross			Profit			Operating			Income
(in millions except percentages)	Profit			Margin			Income			Margin
First Nine Months of Fiscal 2021	$	557.5			59.5	%	$	142.2			15.2	%
Adjustments to reported amounts (1)
2021 plan restructuring charges		16.4						20.9
2020 plan restructuring charges		(1.3	)					(1.5	)
Total adjustments (1)		15.1						19.4
First Nine Months of Fiscal 2021, as adjusted (1)	$	572.6			61.1	%	$	161.6			17.3	%

Note: Totals may not sum due to rounding.

~~(1)~~

(1)

The “As adjusted” measure is a non-GAAP financial measure that adjusts the consolidated statements of net income for the first nine months of fiscal 2021 to exclude the impact of the $20.9 million ($15.6 million after tax) of 2021 plan restructuring charges and the reversal of $1.5 million ($1.1 million after tax) of 2020 plan restructuring charges. See “Non-GAAP Financial Measures” above for an explanation of our use of non-GAAP financial measures.

~~Certain results~~ for the first nine months of fiscal ~~2020 are adjusted~~2021 to exclude the net impact of the ~~$32.7~~$20.9 million ~~Winfrey Stock Compensation expense, the $13.5~~($15.6 million after tax) of ~~2020~~2021 plan restructuring charges and the ~~$3.7~~reversal of $1.5 million ~~goodwill impairment charge related to our Brazil reporting unit.~~($1.1 million after tax) of 2020 plan restructuring charges. See “Non-GAAP Financial Measures” ~~above. The table below sets forth a reconciliation of certain of those components~~above for an explanation of our ~~selected~~use of non-GAAP financial ~~data for the first nine months ended September 26, 2020 which have been adjusted.~~

Gross

Operating

Gross

Profit

Operating

Income

(in millions except percentages)

Profit

Margin

Income

Margin

First Nine Months of Fiscal 2020

$
595.8

56.5
%

$
168.5

16.0
%
Adjustments to reported amounts ⁽¹⁾

Winfrey Stock Compensation expense

—

32.7

2020 plan restructuring charges

7.6

13.5

Goodwill impairment

—

3.7

Total adjustments ⁽¹⁾

7.6

49.8

First Nine Months of Fiscal 2020, as adjusted ⁽¹⁾

$
603.3

57.2
%

$
218.3

20.7
%
measures.

Revenues infor the first nine months of fiscal ~~2021~~2022 were ~~$936.7~~$816.9 million, a decrease of ~~$118.0~~$119.7 million, or ~~11.2%~~12.8%, versus the first nine months of fiscal ~~2020.~~2021. Excluding the impact of foreign currency, which ~~positively~~negatively impacted our revenues in the first nine months of fiscal 2022 by $29.5 million, revenues for the first nine months of fiscal ~~2021 by $25.0 million, revenues in the first nine months of fiscal 2021~~2022 would have decreased ~~13.6%~~9.6% versus the prior year period. This decrease was driven primarily by lower ~~revenues related~~Subscription Revenues reflecting lower sign-ups primarily due to ~~Workshops + Digital Fees~~worsened consumer sentiment and ~~in-studio product sales as a result~~our PersonalPoints program not resonating with consumers to the extent anticipated. This worsened consumer sentiment was due in part to the evolution of the ~~closure~~COVID-19 pandemic as well as the likely impact of ~~our studios~~certain macro factors including increasing inflation, social and ~~reduced operations related to the COVID-19 pandemic.~~political unrest and challenged economic growth. See “—Segment Results” for additional details on revenues.

Total cost of revenues for the first nine months of fiscal 2022 decreased $57.7 million, or 15.2%, versus the first nine months of fiscal 2021. Excluding the impact of foreign currency, which decreased cost of revenues in the first nine months of fiscal ~~2021~~2022 by $8.3 million, cost of revenues for the first nine months of fiscal 2022 would have decreased ~~$79.8 million, or 17.4%,~~13.0% versus the prior year period. Excluding the net impact of the $3.9 million of restructuring charges in the first nine months of fiscal 2022 and the net impact of the $15.1 million of restructuring charges in the first nine months of fiscal 2021, ~~and~~total cost of revenues for the first nine months of fiscal 2022 would have decreased by 12.7%, or 10.5% on a constant currency basis, versus the prior year period.

Gross profit for the first nine months of fiscal 2022 decreased $62.1 million, or 11.1%, versus the first nine months of fiscal 2021. Excluding the impact of foreign currency, which negatively impacted gross profit in the ~~$7.6~~first nine months of fiscal 2022 by $21.1 million, gross profit for the first nine months of fiscal 2022 would have decreased 7.3% versus the prior year period. Excluding the net impact of the $3.9 million of restructuring charges in the first nine months of fiscal 2020, total cost of revenues in the first nine months of fiscal 2021 would have decreased by 19.3%, or 21.0% on a constant currency basis, versus the prior year period. Gross profit decreased $38.3 million, or 6.4%, in the first nine months of fiscal 2021 compared to the first nine months of fiscal 2020. Excluding the impact of foreign currency, which positively impacted gross profit for the first nine months of fiscal 2021 by $17.3 million, gross profit in the first nine months of fiscal 2021 would have decreased 9.3% versus the prior year period. Excluding2022 and the net impact of the $15.1 million of restructuring charges in the first nine months of fiscal 2021, ~~and the impact of the $7.6 million of restructuring charges in~~gross profit for the first nine months of fiscal ~~2020, gross profit in the first nine months of fiscal 2021~~2022 would have decreased by ~~5.1%~~12.8%, or ~~8.0%~~9.1% on a constant currency basis, versus the prior year period primarily due to the decrease in revenues. Gross margin ~~increased to 59.5% in~~for the first nine months of fiscal ~~2021 as compared~~2022 increased to ~~56.5% in~~60.6% versus 59.5% for the ~~prior year period.~~first nine months of fiscal 2021. Excluding the impact of foreign currency, gross margin in the first nine months of fiscal ~~2021~~2022 would have increased ~~2.8%~~1.5% to ~~59.3%~~61.0% versus the prior year period. Excluding the net impact of restructuring charges in the first nine months of fiscal ~~2021~~2022 and the net impact of restructuring charges in the first nine months of fiscal ~~2020,~~2021, gross margin infor the first nine months of fiscal ~~2021~~2022 would have ~~increased 3.9% to~~been flat at 61.1% versus the prior year period. Excluding the impact of foreign currency, the net impact of restructuring charges in the first nine months of fiscal ~~2021~~2022 and the net impact of restructuring charges in the first nine months of fiscal ~~2020,~~2021, gross margin infor the first nine months of fiscal ~~2021~~2022 would have increased ~~3.7%~~0.4% to ~~60.9%~~61.5% versus the prior year period. ~~Gross~~The gross margin increase was driven primarily by ~~a revenue mix shift to our higher~~ margin ~~Digital business and cycling against the net profit from the~~ ~~WW Presents: Oprah’s 2020 Vision~~ ~~tour as a percentage of revenue, partially offset by an increase in fixed costs related to Digital 360, lower margins related to consumer product sales and a contraction of margins~~expansion in the Workshops + Digital ~~business.~~business resulting from a more efficient studio footprint and a reduction in labor costs.

Marketing expenses for the first nine months of fiscal 2022 decreased $13.5 million, or 6.5%, versus the first nine months of fiscal 2021. Excluding the impact of foreign currency, which decreased marketing expenses in the first nine months of fiscal ~~2021 increased $10.6~~2022 by $6.1 million, ~~or 5.3%, versus the first nine months of fiscal 2020. Excluding the impact of foreign currency, which increased~~ marketing expenses for the first nine months of fiscal ~~2021 by $6.6 million,~~2022 would have decreased 3.6% versus the prior year period. This decrease in marketing expenses was primarily due to a decline in TV media.Marketing expenses as a percentage of revenue for the first nine months of fiscal ~~2021 would have~~2022 increased ~~2.0%~~to 23.9% from 22.3% for the first nine months of fiscal 2021.

Selling, general and administrative expenses for the first nine months of fiscal 2022 decreased $13.3 million, or 6.4%, versus the first nine months of fiscal ~~2020. This increase in marketing expenses was primarily due to higher spending in online and social media, partially offset by a decline in TV media spending.Marketing expenses as a percentage~~2021. Excluding the impact of ~~revenue increased to 22.3% in the first nine months of fiscal 2021 as compared to 18.8% in the prior year period.~~

~~Selling,~~foreign currency, which decreased selling, general and administrative expenses in the first nine months of fiscal ~~2021 decreased $18.9~~2022 by $4.0 million, ~~or 8.4%, versus the first nine months of fiscal 2020. Excluding the impact of foreign currency, which increased~~ selling, general and administrative expenses for the first nine months of fiscal ~~2021 by $3.3~~2022 would have decreased 4.5% versus the prior year period. Excluding the impact of the $18.5 million ~~selling, general and administrative expenses~~of restructuring charges in the first nine months of fiscal ~~2021 would have decreased 9.9% versus the prior year period. Excluding~~2022 and the net impact of the $4.3 million of restructuring charges in the first nine months of fiscal 2021, selling, general and administrative expenses for the first nine months of fiscal 2022 would have decreased by 13.6%, or 11.6% on a constant currency basis, versus the prior year period. This decrease in selling, general and administrative expenses was primarily due to lower stock compensation expense, lower salary costs, lower professional fees and an increase in capitalizable projects. Selling, general and administrative expenses as a percentage of revenue for the first nine months of fiscal 2022 increased to 23.7% from 22.1% for the first nine months of fiscal 2021. Excluding the impact of ~~both~~restructuring charges in the ~~$32.7 million Winfrey Stock Compensation expense~~first nine months of fiscal 2022 and the ~~$5.9~~net impact of restructuring charges in the first nine months of fiscal 2021, selling, general and administrative expenses as a percentage of revenue for the first nine months of fiscal 2022 would have decreased by 0.2%, or 0.5% on a constant currency basis, versus the prior year period.

In performing our interim impairment analysis as of October 1, 2022, we determined that the carrying amounts of our United States, Canada and New Zealand franchise rights acquired with indefinite-lived units of account exceeded their respective fair values and, as a result, we recorded impairment charges for our United States, Canada and New Zealand units of account of $298.3 million, $13.3 million and $1.1 million, respectively, in the third quarter of fiscal 2022.

In performing our annual impairment analysis as of May 8, 2022, we determined that the carrying amounts of our Canada and New Zealand franchise rights acquired with indefinite-lived units of account exceeded their respective fair values and, as a result, we recorded impairment charges for our Canada and New Zealand units of account of $24.5 million and $0.8 million, respectively, in the second quarter of fiscal 2022. In addition, we determined in the second quarter of fiscal 2022 to exit the Kurbo business in the third quarter of fiscal 2022 as part of our strategic plan. As a result of this determination, we recorded an impairment charge of $1.1 million in the second quarter of fiscal 2022, which comprised the entire goodwill balance for Kurbo.

Operating loss for the first nine months of fiscal 2022 was $232.2 million compared to operating income for the first nine months of fiscal 2021 of $142.2 million. Operating loss for the first nine months of fiscal 2022 was negatively impacted by $8.9 million of foreign currency. Excluding the impact of the $339.2 million of franchise rights acquired and goodwill impairments in the first nine months of fiscal 2022, the net impact of the $22.4 million of restructuring charges in the first nine months of fiscal ~~2020, selling, general~~2022 and administrative expenses in the first nine months of fiscal 2021 would have increased by 8.2%, or 6.5% on a constant currency basis, versus the prior year period. This increase in selling, general and administrative expenses in the first nine months of fiscal 2021 was driven primarily by higher employee compensation and related expenses. Selling, general and administrative expenses as a percentage of revenue increased to 22.1% in the first nine months of fiscal 2021 as compared to 21.4% in the prior year period.

~~In performing our interim impairment analysis for our Brazil reporting unit during the first quarter of fiscal 2020,~~ ~~we determined that, based on the fair values calculated, the carrying amount of goodwill related to our Brazil reporting unit exceeded our fair value and recorded an impairment charge of~~ ~~$3.7 million for the first nine months of fiscal 2020~~.

Operating income in the first nine months of fiscal 2021 decreased $26.3 million, or 15.6%, versus the prior year period. Excluding the impact of foreign currency, which positively impacted operating income for the first nine months of fiscal 2021 by $7.4 million, operating income in the first nine months of fiscal 2021 would have decreased 20.0% versus the prior year period. Excluding the net impact of the $19.4 million of restructuring charges in the first nine months of fiscal 2021, ~~and~~operating income would have been $129.3 million for the first nine months of fiscal 2022, a decrease of 20.0%, or 13.1% on a constant currency basis, versus operating income in the prior year period. Operating loss margin for the first nine months of fiscal 2022 was 28.4% compared to operating income margin for the first nine months of fiscal 2021 of 15.2%. Excluding the impact of the ~~$32.7 million Winfrey Stock Compensation expense, the $13.5 million of restructuring charges~~franchise rights acquired and ~~the $3.7 million~~ goodwill ~~impairment charge related to our Brazil reporting unit~~impairments in the first nine months of fiscal ~~2020, operating income~~2022, the net impact of restructuring charges in the first nine months of fiscal 2021 would have decreased by 26.0%, or 29.4% on a constant currency basis, versus the prior year period. Operating income margin in the first nine months of fiscal 2021 decreased 0.8% to 15.2% versus 16.0% in the first nine months of fiscal 2020. Excluding2022 and the net impact of restructuring charges in the first nine months of fiscal 2021, ~~and the impact of the Winfrey Stock Compensation expense, restructuring charges and the goodwill impairment charge in~~operating income margin would have been 15.8% for the first nine months of fiscal ~~2020, operating income margin in the first nine months~~2022, a decrease of ~~fiscal 2021 would have decreased by 3.4%~~1.4%, or ~~3.8%~~0.7% on a constant currency basis, versus operating income margin in the prior year period. This decrease in operating income margin was driven ~~primarily~~ by an increase in marketing expenses as a percentage of revenue, partially offset by a decrease in selling, general and administrative expenses as a percentage of revenue and an increase in ~~marketing expenses as a percentage of revenue, partially offset by an increase in~~ gross margin, versus the prior year period.

Interest expense infor the first nine months of fiscal ~~2021~~2022 decreased ~~$23.6~~$9.9 million, or ~~25.6%~~14.4%, versus the first nine months of fiscal ~~2020.~~2021. The decrease in interest expense was driven primarily by lower interest rates under our ~~New~~ Term Loan Facility and on our Senior Secured Notes (as defined below) as a result of our April 2021 debt ~~refinancing.~~refinancing (as defined below). The effective interest rate on our debt, based on interest incurred (which includes amortization of our deferred financing costs and debt discount) and our average borrowings during the first nine months of fiscal ~~2021~~2022 and the first nine months of fiscal ~~2020~~2021 and excluding the impact of our interest rate swaps then in effect, decreased to 4.98% per annum at the end of the first nine months of fiscal 2022 from 5.28% per annum at the end of the first nine months of fiscal ~~2021 from 6.84% per annum at the end of the first nine months of fiscal 2020.~~2021. Including the impact of our interest rate swaps then in effect, the effective interest rate on our debt, based on interest incurred (which includes amortization of our deferred financing costs and debt discount) and our average borrowings during the first nine months of fiscal ~~2021~~2022 and the first nine months of fiscal ~~2020,~~2021, decreased to 5.40% per annum at the end of the first nine months of fiscal 2022 from 6.00% per annum at the end of the first nine months of fiscal ~~2021 from 7.53% per annum at the end of the first nine months of fiscal 2020.~~ 2021. See “—Liquidity and Capital Resources—Long-Term Debt” for additional details regarding our debt, including interest rates and payments thereon. For additional details on our interest rate 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, increased by ~~$0.7~~$2.4 million infor the first nine months of fiscal ~~2021~~2022 to ~~$0.9~~$3.3 million of expense as compared to ~~$0.2~~$0.9 million of expense infor the ~~prior year period.~~

In the second quarter of fiscal 2021,, we w~~rote-off~~wrote-off $29.2 million of fees in connection with our April 2021 debt refinancing that we recorded as an early extinguishment of debt charge, comprised of ~~$12.9~~$12.9 million of a prepayment penalty on the Discharged Senior Notes (as defined below), $9.0 million of financing fees and $7.2 million of pre-existing deferred financing fees and debt discount. For additional details on this refinancing, see “—Liquidity and Capital Resources—Long-Term Debt”.

Our effective tax rate infor the first nine months of fiscal ~~2021~~2022 was ~~14.9%~~25.6% as compared to ~~17.8% in~~14.9% for the first nine months of fiscal ~~2020.~~2021. The tax benefit for the first nine months of fiscal 2022 was impacted by out-of-period income tax adjustments and a U.S. state tax rate change, partially offset by tax shortfalls from stock compensation. For the first nine months of fiscal 2022, the difference between the U.S. federal statutory tax rate and our consolidated effective tax rate was primarily due to state income tax expense and tax expense from income earned in foreign jurisdictions, partially offset by a tax benefit related to FDII. The tax expense for the first nine months of fiscal 2021 was impacted by tax windfalls from stock compensation and the reversal of a valuation allowance related to tax benefits for foreign losses that are now expected to be realized. For the first nine months of fiscal 2021, the difference between the U.S. federal statutory tax rate and our consolidated effective tax rate was primarily due to state income tax expense and tax expense from income earned in foreign jurisdictions, partially offset by a tax benefit related to FDII. ~~The~~

We continue to evaluate the realizability of our deferred tax assets and if our U.S. business continues to decline, it is possible that some or all of the business interest expense carryforward may not be used. While this carryforward has an indefinite life, a change in the valuation allowance is possible in the foreseeable future which could materially increase our tax expense in the period the valuation allowance is recognized.

Net loss for the first nine months of fiscal ~~2020~~2022 was ~~impacted by~~ ~~a tax benefit related~~$218.9 million compared to the reversal of the fiscal 2018, fiscal 2019 and fiscal 2020 tax impact of GILTI and tax windfalls from stock compensation, partially offset by an impairment of our Brazil reporting unit which had a full valuation allowance and an increase to tax reserves related to a foreign income tax audit~~. For the first nine months of fiscal 2020, the difference between the U.S. federal statutory tax rate and our consolidated effective tax rate was primarily due to~~ ~~tax expense from income earned in foreign jurisdictions and state income tax expense, partially offset by a tax benefit related to FDII.~~

~~Net income attributable to the Company in the first~~ ~~nine months~~ ~~of fiscal 2021 was $37.0 million, which reflected a~~ ~~$25.5 million, or 40.8%, decrease from the first~~ ~~nine months~~ ~~of fiscal 2020.~~ ~~Excluding the impact of foreign currency, which positively impacted~~ net income ~~attributable to the Company in~~for the first nine months of fiscal 2021 of $37.0 million. Net loss for the first nine months of fiscal 2022 was negatively impacted by ~~$5.3~~$5.7 million of foreign currency. Net loss for the first nine months of fiscal 2022 included a $256.4 million impact from franchise rights acquired and goodwill impairments and a $16.7 million net impact from restructuring charges. Net income ~~attributable to the Company in~~for the first nine months of fiscal 2021 ~~would have decreased 49.3% from the first nine months of fiscal 2020.~~ ~~Net income attributable to the Company in the first~~ ~~nine months~~ ~~of fiscal 2021~~ included a ~~$21.8~~$21.8 million impact from the write-off of fees related to our April 2021 debt refinancing and a ~~$14.5~~an $14.5 million net impact from restructuring charges. N~~et income attributable to the Company in the first~~ ~~nine months~~ ~~of fiscal 2020 included a~~ $24.4 million impact from the Winfrey Stock Compensation expense, a $10.0 million impact from restructuring charges and a $2.7 million impact from the goodwill impairment charge related to our Brazil reporting unit.

~~EPS in~~Diluted net loss per share for the first nine months of fiscal ~~2021~~2022 was ~~$0.52~~$3.12 compared to ~~$0.89 in~~EPS of $0.52 for the first nine months of fiscal ~~2020.~~2021. Diluted net loss per share for the first nine months of fiscal 2022 included a $3.65 impact from franchise rights acquired and goodwill impairments and a $0.24 net impact from restructuring charges. EPS infor the first nine months of fiscal 2021 included a ~~$0.31~~$0.31 impact from the write-off of fees related to our April 2021 debt refinancing and a $0.20 net impact from restructuring charges. Additionally, EPS in the first nine months of fiscal 2021 included a $0.02 tax benefit due to the reversal of a valuation allowance related to foreign losses that are now expected to be realized. EPS in the first nine months of fiscal 2020 included a $0.35 impact from the Winfrey Stock Compensation expense, a $0.14 impact from restructuring charges and a $0.04 impact from the goodwill impairment charge related to our Brazil reporting unit. ~~Additionally, EPS in the~~ ~~first nine months of fiscal~~ ~~2020 included a $0.11 tax benefit related to the reversal of the fiscal 2018 and fiscal 2019 tax impact of GILTI.~~

The following tables set forth key metrics by reportable segment for the first nine months of fiscal ~~2021~~2022 and the percentage change in those metrics versus the prior year period:

The decrease in North America revenues infor the first nine months of fiscal ~~2021~~2022 versus the prior year period was driven by a decrease in Subscription Revenues and, to a lesser extent, a decrease in product sales and other. The decrease in Subscription Revenues for the first nine months of fiscal 2022 versus the prior year period was driven primarily by a decrease in Digital Subscription Revenues. ~~The decrease in~~Digital Subscription Revenues inwere negatively impacted by both the recruitment decline during the first nine months of fiscal 2022 as compared to the prior year period and the lower number of Incoming Digital Subscribers at the beginning of fiscal 2022 versus the beginning of fiscal 2021. This decline in recruitments was driven primarily by worsened consumer sentiment in the current environment and our PersonalPoints program not resonating with consumers to the extent anticipated. The decrease in North America Total Paid Weeks for the first nine months of fiscal 2022 versus the prior year period was driven primarily by both lower recruitments for the first nine months of fiscal 2022 versus the prior year period and the lower number of Total Incoming Subscribers at the beginning of fiscal 2022 versus the beginning of fiscal 2021. For the first nine months of fiscal 2022, Workshops + Digital Fees, Workshops + Digital Paid Weeks and End of Period Workshops + Digital Subscribers all substantially benefited from the transition of our former Digital 360 members from the Digital business to the Workshops + Digital business during the second and third quarters of fiscal 2022 as previously disclosed.

The decrease in North America product sales and other for the first nine months of fiscal 2022 versus the prior year period was driven primarily by a decrease in e-commerce product sales.

The decrease in Continental Europe revenues for the first nine months of fiscal 2022 versus the prior year period was driven by a decrease in Subscription Revenues and, to a lesser extent, a decrease in product sales and other. The decrease in Subscription Revenues for the first nine months of fiscal 2022 versus the prior year period was driven primarily by a decrease in Digital Subscription Revenues. Digital Subscription Revenues were negatively impacted by both the recruitment decline during the first nine months of fiscal 2022 as compared to the prior year period and the lower number of Incoming Digital Subscribers at the beginning of fiscal 2022 versus the beginning of fiscal 2021. This decline in recruitments was driven primarily by worsened consumer sentiment in the current environment and our PersonalPoints program not resonating with consumers to the extent anticipated. The decrease in Continental Europe Total Paid Weeks for the first nine months of fiscal 2022 versus the prior year period was driven primarily by both lower recruitments for the first nine months of fiscal 2022 versus the prior year period and the lower number of Total Incoming Subscribers at the beginning of fiscal 2022 versus the beginning of fiscal 2021.

The decrease in Continental Europe product sales and other for the first nine months of fiscal 2022 versus the prior year period was driven primarily by a decrease in e-commerce product sales.

The decrease in UK revenues for the first nine months of fiscal 2022 versus the prior year period was driven by a decrease in Subscription Revenues and, to a lesser extent, a decrease in product sales and other. The decrease in Subscription Revenues for the first nine months of fiscal 2022 versus the prior year period was driven primarily by a decrease in Digital Subscription Revenues. Digital Subscription Revenues were negatively impacted by both the lower number of Incoming Digital Subscribers at the beginning of fiscal 2022 versus the beginning of fiscal 2021 and the recruitment decline during the first nine months of fiscal 2022 as compared to the prior year period. This decline in recruitments was driven primarily by worsened consumer sentiment in the current environment and our PersonalPoints program not resonating with consumers to the extent anticipated. The decrease in UK Total Paid Weeks for the first nine months of fiscal 2022 versus the prior year period was driven primarily by both the lower number of Total Incoming Subscribers at the beginning of fiscal 2022 versus the beginning of fiscal 2021 and lower recruitments for the first nine months of fiscal 2022 versus the prior year period.

The decrease in UK product sales and other for the first nine months of fiscal 2022 versus the prior year period was driven primarily by a decrease in e-commerce product sales.

The decrease in Other revenues for the first nine months of fiscal 2022 versus the prior year period was driven by a decrease in Subscription Revenues and, to a lesser extent, a decrease in product sales and other. The decrease in Subscription Revenues for the first nine months of fiscal 2022 versus the prior year period was driven by a decrease in Workshops + Digital Fees ~~partially offset by an increase~~and, to a lesser extent, a decrease in Digital Subscription Revenues. ~~Workshops + Digital Fees~~Subscription Revenues were negatively impacted by both the recruitment decline during the first nine months of fiscal 2022 as compared to the prior year period and the lower number of Total Incoming ~~Workshops + Digital~~ Subscribers at the beginning of fiscal ~~2021~~2022 versus the beginning of fiscal ~~2020~~2021. This decline in recruitments was driven primarily by worsened consumer sentiment in the current environment and our PersonalPoints program not resonating with consumers to the ~~significant recruitment decline~~extent anticipated.

The decrease in Other product sales and other for the first nine months of fiscal 2021 driven by the closure of certain of our studios and the limited reopening of others primarily related to the COVID-19 environment. The decrease in North America Total Paid Weeks in the first nine months of fiscal 2021 was driven primarily by lower recruitments versus the prior year period due to the COVID-19 environment and cycling against the successful launch of the ~~myWW~~ ~~program in the first nine months of fiscal 2020.~~

~~The decrease in North America product sales and other in the first nine months of fiscal 2021 versus the prior year period was driven primarily by cycling against the~~ ~~revenue received in connection with the~~ ~~WW Presents: Oprah’s 2020 Vision~~ ~~tour in the~~ ~~first nine months of fiscal~~ ~~2020~~.

The decrease in Continental Europe revenues in the first nine months of fiscal 2021 versus the prior year period was driven by a decrease in product sales and other. The slight increase in Subscription Revenues in the first nine months of fiscal 2021 versus the prior year period was driven by the impact of foreign currency. Excluding foreign currency, Continental Europe Subscription Revenues in the first nine months of fiscal 2021 would have decreased versus the prior year period driven by a decrease in Workshops + Digital Fees, partially offset by an increase in Digital Subscription Revenues. Workshops + Digital Fees were negatively impacted by both the lower number of Incoming Workshops + Digital Subscribers at the beginning of fiscal 2021 versus the beginning of fiscal 2020 and the significant recruitment decline in the first nine months of fiscal 2021 driven by the closure of certain of our studios and the limited reopening of others primarily related to the COVID-19 environment. The increase in Continental Europe Total Paid Weeks in the first nine months of fiscal 2021 ~~versus the prior year period~~ ~~was driven primarily by the higher number of Incoming Digital Subscribers at the beginning of fiscal 2021 versus the beginning of fiscal 2020.~~

~~The decrease in Continental Europe product sales and other in the first nine months of fiscal 2021 versus the prior year period was driven primarily by a decrease in in-studio product sales.~~

The decrease in UK revenues in the first nine months of fiscal 2021 versus the prior year period was driven by both a decrease in Subscription Revenues and a decrease in product sales and other. The decrease in Subscription Revenues in the first nine months of fiscal 2021 versus the prior year period was driven by a decrease in Workshops + Digital Fees, partially offset by an increase in Digital Subscription Revenues. Workshops + Digital Fees were negatively impacted by both the lower number of Incoming Workshops + Digital Subscribers at the beginning of fiscal 2021 versus the beginning of fiscal 2020 and the significant recruitment decline in the first nine months of fiscal 2021 driven by the closure of certain of our studios and the limited reopening of others primarily related to the COVID-19 environment. The decrease in UK Total Paid Weeks in the first nine months of fiscal 2021 was driven primarily by lower recruitments versus the prior year period due to the COVID-19 environment and cycling against the successful launch of the ~~myWW~~ ~~program in the first nine months of fiscal 2020.~~

~~The decrease in UK product sales and other in the first nine months of fiscal 2021~~2022 versus the prior year period was driven primarily by a decrease in product ~~sales.~~

~~The decrease in Other revenues in the first nine months of fiscal 2021 versus the prior year period was driven by a decrease in product~~ sales, licensing and other. The slight increase in Subscription Revenues in the first nine months of fiscal 2021 versus the prior year period was driven by the impact of foreign currency. Excluding foreign currency, Other Subscription Revenues in the first nine months of fiscal 2021 would have decreased versus the prior year period driven by a decrease in Workshops + Digital Fees, partially offset by an increase in Digital Subscription Revenues. Workshops + Digital Fees were negatively impacted by both the lower number of Incoming Workshops + Digital Subscribers at the beginning of fiscal 2021 versus the beginning of fiscal 2020 and the recruitment decline in the first nine months of fiscal 2021 driven by the closure of certain of our studios and the limited reopening of others primarily related to the COVID-19 environment.

~~The decrease in Other product sales and other in the first nine months of fiscal 2021 versus the prior year period was driven primarily by a decrease in~~ franchise ~~commissions and product sales.~~
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 engage in selective acquisitions. We currently believe that cash generated by operations, our cash on hand of approximately ~~$188.2~~$188.3 million at October ~~2, 2021,~~1, 2022, our ~~$173.9 million of~~ availability under our ~~New~~ Revolving Credit Facility (as defined below) at October ~~2, 2021~~1, 2022 and our continued cost focus will provide us with sufficient liquidity to meet our obligations for the ~~next twelve months.~~short- and long-term. In addition, if necessary, we have the flexibility to delay investments or reduce marketing spend.

We continue to proactively manage our liquidity so we can maintain flexibility to fund investments in our business, honor our long-term debt obligations, and respond to evolving business and consumer ~~conditions arising from the COVID-19 pandemic.~~conditions. To increase our flexibility and reduce our cash interest payments, we refinanced our then-existing credit facilities and then-existing senior notes in April 2021. See “—Long-Term Debt” for additional details on this refinancing. Additionally, we instituted a number of measures throughout our operations to mitigate expenses and reduce costs as well as ensure liquidity and the availability of our New Revolving Credit Facility. As previously disclosed, in connection with our continued focus on maintaining flexibility and exercising cost discipline, we estimate our fiscal 2021 restructuring plan will cost approximately $22.0 million in fiscal 2021.liquidity. The evolving nature, and uncertain economic impact, of ~~COVID-19~~the current demand environment may impact our liquidity going forward. To the extent that we do not successfully manage our costs, our liquidity and financial results, as well as our ability to fully access our ~~New~~ Revolving Credit Facility, may be adversely affected.

As market conditions warrant, we may, from time to time, seek to purchase our outstanding debt securities or loans, including the Senior Secured Notes and borrowings under the ~~New~~ 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, the incurrence of new secured or unsecured debt, the issuance of our equity or the sale of assets. 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.

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:

The following table sets forth a summary of the primary factors contributing to the ~~$5.0~~$13.3 million decrease in our working capital deficit, excluding cash and cash ~~equivalents and current portion of long-term debt:~~equivalents:

The ~~increase in prepaid income taxes was primarily due to the timing of tax payments, partially offset by tax accruals. The decrease~~change in derivative (receivable) payable, net was due to a change in fair value driven by the change in interest rates. The decrease in ~~the portion of operating lease liabilities due within one year~~deferred revenue was ~~due~~driven primarily by lower signups compared to the ~~increase in lease terminations~~. ~~The decrease in income taxes payable was primarily due to the timing of tax payments, partially offset by tax accruals.~~prior year. The increase in accrued interest was ~~primarily~~ due to the timing of debt principal payments. The ~~increase~~decrease in ~~operational liabilities and other, net of assets, which includes accrued salaries and wages,~~prepaid income taxes was driven primarily by ~~declines in inventory balances due to seasonality and prepaid advertising due to seasonality and~~the timing of tax payments.

The following table sets forth a summary of our cash flows for the nine months ended:

Cash flows provided by operating activities of $80.5 million for the first nine months of fiscal 2022 reflected a decrease of $44.8 million from $125.4 million of cash flows provided by operating activities for the first nine months of fiscal 2021. The decrease in cash provided by operating activities was primarily the result of a decrease in net income, partially offset by an increase in non-cash add-back adjustments in the first nine months of fiscal 2022 as compared to the prior year period.

Cash flows provided by operating activities of $125.4 million infor the first nine months of fiscal 2021 reflected a decrease of $2.1 million from $127.4 million of cash flows provided by operating activities for the first nine months of fiscal 2020.

Net cash used for investing activities totaled $33.7 million for the first nine months of fiscal 2022, a decrease of $9.9 million as compared to the first nine months of fiscal 2021. This decrease was primarily attributable to a decrease in cash paid for acquisitions in the first nine months of fiscal ~~2020.~~

Cash flows provided by operating activities of $127.4 million in the first nine months of fiscal 2020 reflected a decrease of $24.3 million from $151.7 million of cash flows provided by operating activities in the first nine months of fiscal 2019. The decrease in cash provided by operating activities was primarily the result of a decrease in net income attributable to the Company of $27.8 million in the first nine months of fiscal 20202022 as compared to the prior year period.

Net cash used for investing activities totaled $43.6 million infor the first nine months of fiscal 2021, a decrease of $4.2 million as compared to the first nine months of fiscal 2020. This decrease was primarily attributable to lower capital expenditures,, partially offset by an increase in cash paid for acquisitions, in the first nine months of fiscal 2021 as compared to the prior year period.

Net cash used for ~~investing~~financing activities totaled ~~$47.8~~$2.1 million infor the first nine months of fiscal ~~2020, an increase~~2022, a decrease of ~~$13.4~~$53.8 million as compared to the first nine months of fiscal ~~2019.~~2021. This ~~increase~~decrease was primarily attributable to higher capital expenditures in the first nine months of fiscal 2020. In the first nine months of fiscal 2020, we entered into a strategic collaboration agreement with ClassPass Inc. (“ClassPass”) and also invested $5.0 million in ClassPass’ $285.0 million Series E Preferred Stock funding round.

~~Net cash used for financing activities totaled $55.9 million in the first nine months of fiscal 2021 primarily due~~ to the April 13, 2021 payment in full of approximately $1.2 billion of borrowings under our then-existing credit facilities and redemption of all of the $300.0 million aggregate principal amount of our then-existing senior notes, as well as the payment in aggregate of $37.0 million of prepayment penalties, financing costs and debt discount in connection with the April 2021 debt ~~refinancing.~~refinancing in the first nine months of fiscal 2021. In addition, there was ~~$19.3~~$19.3 million used for scheduled debt repayments under our then-existing term loan facility in the first quarter of fiscal 2021 and $2.5 million used for scheduled debt repayments under our ~~New~~ Term Loan Facility (as defined below) in the third quarter of fiscal ~~2021~~. 2021. These payments were partially offset by the proceeds received of $1,000.0 million in an aggregate principal amount of borrowings under our ~~New~~ Term Loan Facility and proceeds received from the issuance of $500.0 million in aggregate principal amount of our Senior Secured Notes (as defined below) in connection with our April 2021 debt ~~refinancing.~~ refinancing in the first nine months of fiscal 2021. See “—Long-Term Debt” for additional details on debt.

Net cash used for financing activities totaled ~~$61.0~~$55.9 million infor the first nine months of fiscal ~~2020~~2021 primarily due to ~~$57.8~~the April 13, 2021 payment in full of approximately $1.2 billion of borrowings under our then-existing credit facilities and redemption of all of the $300.0 million aggregate principal amount of our then-existing senior notes, as well as the payment in aggregate of $37.0 million of prepayment penalties, financing costs and debt discount in connection with the April 2021 debt refinancing. In addition, there was $19.3 million used for scheduled debt repayments under our then-existing term loan ~~facility.~~facility in the first quarter of fiscal 2021 and $2.5 million used for scheduled debt repayments under our Term Loan Facility in the third quarter of fiscal 2021. These payments were partially offset by the proceeds received of $1,000.0 million in an aggregate principal amount of borrowings under our Term Loan Facility and proceeds received from the issuance of $500.0 million in aggregate principal amount of our Senior Secured Notes in connection with our April 2021 debt refinancing. See “—Long-Term Debt” for additional details on debt.

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 October ~~2, 2021:~~1, 2022:

On April 13, 2021, we (1) repaid in full approximately $1.2 billion in aggregate principal amount of senior secured tranche B term loans due in 2024 under our then-existing credit facilities and (2) redeemed all of the $300.0 million in aggregate principal amount of our then-outstanding 8.625% Senior Notes due in 2025, or the Discharged Senior ~~Notes~~. Notes. On April 13, 2021, our then-existing credit facilities included a senior secured revolving credit facility (which included borrowing capacity available for letters of credit) due in 2022 with $175.0 million in an aggregate principal amount of commitments. There were no outstanding borrowings under such revolving credit facility on that date. We funded such repayment of loans and redemption of notes with cash on hand as well as with proceeds received from approximately $1,000.0 million in an aggregate principal amount of borrowings under our new credit facilities (as amended from time to time, referred to herein as the Credit Facilities) and proceeds received from the issuance of $500.0 million in aggregate principal amount of 4.500% Senior Secured Notes due 2029, or the Senior Secured ~~Notes.~~Notes, each as described below. These transactions are collectively referred to herein as the April 2021 debt refinancing. Our new credit facilities consist of a $1,000.0 million term loan facility and a $175.0 million revolving credit facility (which includes borrowing capacity available for letters of credit) (collectively, as amended from time to time, referred to herein as the New Credit Facilities). During the second quarter of fiscal 2021, we incurred fees of $37.9 million (which included ~~$12.9~~$12.9 million of a prepayment penalty on the Discharged Senior Notes and $5.0 million of a debt discount on our ~~New~~ Term Loan Facility (as(as defined ~~below~~)below)) in connection with our April 2021 debt refinancing. In addition, we recorded a loss on early extinguishment of debt of $29.2 million in connection thereto. This early extinguishment of debt ~~write-off~~charge was comprised of ~~$12.9~~$12.9 million of a prepayment penalty on the Discharged Senior Notes,, ~~$9.0~~ $9.0 million of financing fees paid in connection with our April 2021 debt refinancing and the write-off of $7.2 million of pre-existing deferred financing fees and debt discount.

The ~~New~~ Credit Facilities were issued under a credit agreement, dated April 13, 2021 or, as amended from time to time, the ~~New~~ Credit Agreement, among the Company, as borrower, the lenders party thereto, and Bank of America, N.A., or Bank of America, as administrative agent and an issuing bank. The ~~New~~ Credit Facilities consist of (1) $1,000.0 million in aggregate principal amount of senior secured tranche B term loans due in 2028, or the ~~New~~ Term Loan Facility, and (2) $175.0 million in an aggregate principal amount of commitments under a senior secured revolving credit facility (which includes borrowing capacity available for letters of credit) due in 2026, or the ~~New~~ Revolving Credit Facility.

In December 2021, we made voluntary prepayments at par in an aggregate amount of $52.5 million in respect of our outstanding term loans under the Term Loan Facility. As a result of these prepayments, we wrote off a debt discount and deferred financing fees of $1.2 million in the aggregate in the fourth quarter of fiscal 2021.

As of October ~~2, 2021,~~1, 2022, we had ~~$997.5~~$945.0 million in an aggregate principal amount of loans outstanding under our ~~New~~ Credit Facilities, with $173.9 million of availability and $1.1 million in issued but undrawn letters of credit outstanding under the ~~New~~ Revolving Credit Facility. There were no outstanding borrowings under the ~~New~~ Revolving Credit Facility as of October ~~2, 2021.~~1, 2022.

All obligations under the ~~New~~ Credit Agreement are guaranteed by, subject to certain exceptions, each of our current and future wholly-owned material domestic restricted subsidiaries. All obligations under the ~~New~~ Credit Agreement, and the guarantees of those obligations, are secured by substantially all of the assets of the Company and each guarantor, subject to customary exceptions, including:

The ~~New~~ Credit Facilities require the Company to prepay outstanding term loans, subject to certain exceptions, with:

The foregoing mandatory prepayments will be used to reduce the installments of principal on the ~~New~~ Term Loan Facility. We may voluntarily repay outstanding loans under the ~~New~~ Credit Facilities at any time without penalty, except for customary “breakage” costs with respect to LIBOR loans under the ~~New~~ Credit Facilities.

Borrowings under the ~~New~~ 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 Federal Funds Effective Rate as determined by the Federal Reserve Bank of New York, (b) the prime rate of Bank of America 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 1.50% or (2) an applicable margin plus a LIBOR rate determined by reference to the cost 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 0.50%. Borrowings under the ~~New~~ 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 Federal Funds Effective Rate as determined by the Federal Reserve Bank of New York, (b) the prime rate of Bank of America 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 1.00% or (2) a LIBOR rate determined by reference to the cost of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, provided such rate is not lower than a floor of zero. As of October ~~2, 2021,~~1, 2022, the applicable margins for the LIBOR rate borrowings under the ~~New~~ Term Loan Facility and the ~~New~~ Revolving Credit Facility were 3.50% and ~~2.50%~~2.75%, respectively. In the event that LIBOR is phased out as is currently expected, the ~~New~~ Credit Agreement provides that we and the administrative agent may amend the ~~New~~ 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 ~~New~~ Credit Agreement; provided that such lending syndicate may not object to a SOFR-based successor rate contained in any such amendment. If we fail to do so, our borrowings will be based off of the alternative base rate plus a margin.

On a quarterly basis, we pay a commitment fee to the lenders under the ~~New~~ Revolving Credit Facility in respect of unutilized commitments thereunder, which commitment fee fluctuates depending upon our Consolidated First Lien Leverage Ratio (as defined in the ~~New~~ Credit Agreement).

The availability of certain baskets and the ability to enter into certain transactions are also subject to compliance with certain financial ratios. In addition, if the aggregate principal amount of extensions of credit outstanding under the ~~New~~ Revolving Credit Facility as of any fiscal quarter end exceeds 35% of the amount of the aggregate commitments under the ~~New~~ Revolving Credit Facility in effect on such date, we must be in compliance with a Consolidated First Lien Leverage Ratio of ~~on or prior to the end of the first fiscal quarter of 2022, 6.00:1.00, with a step down to~~ 5.75:1.00 for the period ending after the first fiscal quarter of 2022 through and including with the first fiscal quarter of 2023, with ~~an additional~~a step down to 5.50:1.00 for the period ending after the first fiscal quarter of 2023 through and including with the first fiscal quarter of 2024, with aan additional step down to 5.25:1.00 for the period ending after the first fiscal quarter of 2024 through and including with the first fiscal quarter of 2025 and again to 5.00:1.00, for the period following the first fiscal quarter of 2025. As of October 1, 2022, our actual Consolidated First Lien Leverage Ratio was 4.99:1.00 and there were no borrowings under our Revolving Credit Facility and total letters of credit issued were $1.1 million. We expect we may not be able to satisfy the Consolidated First Lien Leverage Ratio in the near future, and as a result, the amount of funds we are able to borrow under the Revolving Credit Facility would be effectively limited.

The Senior Secured Notes were issued pursuant to an Indenture, dated as of April 13, 2021, or, as amended, supplemented or modified from time to time, the ~~New~~ Indenture, among the Company, the guarantors named therein and The Bank of New York Mellon, as trustee and notes collateral agent. The ~~New~~ Indenture contains customary terms, events of default and covenants 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 Senior Secured Notes accrue interest at a rate per annum equal to 4.500% and will mature on April 15, 2029. Interest on the Senior Secured Notes is payable semi-annually on April 15 and October 15 of each year, beginning on October 15, 2021. On or after April 15, 2024, we may on any one or more occasions redeem some or all of the Senior Secured Notes at a purchase price equal to 102.250% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, but not including, the redemption date, such optional redemption price decreasing to 101.125% on or after April 15, 2025 and to 100.000% on or after April 15, 2026. Prior to April 15, 2024, we may on any one or more occasions redeem up to 40% of the aggregate principal amount of the Senior Secured Notes with an amount not to exceed the net proceeds of certain equity offerings at 104.500% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the redemption date. Prior to April 15, 2024, we may redeem some or all of the Senior Secured Notes at a make-whole price plus accrued and unpaid interest, if any, to, but not including, the redemption date. In addition, during any twelve-month period ending prior to April 15, 2024, we may redeem up to 10% of the aggregate principal amount of the Senior Secured Notes at a purchase price equal to 103.000% of the principal amount of the Senior Secured Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. If a change of control occurs, we must offer to purchase for cash the Senior Secured Notes at a purchase price equal to 101% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, but not including, the purchase date. Following the sale of certain assets and subject to certain conditions, we must offer to purchase for cash the Senior Secured Notes at a purchase price equal to 100% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest, if any, to, but not including, the purchase date.

The Senior Secured Notes are guaranteed on a senior secured basis by our subsidiaries that guarantee the ~~New~~ Credit Facilities. The Senior Secured Notes and the note guarantees are secured by a first-priority lien on all the collateral that secures the ~~New~~ Credit Facilities, subject to a shared lien of equal priority with the Company’s and each guarantor’s obligations under the ~~New~~ Credit Facilities and subject to certain thresholds, exceptions and permitted liens.

At October ~~2, 2021,~~1, 2022, we had ~~$1,497.5~~$1,445.0 million outstanding under the ~~New~~ Credit Facilities and the Senior Secured Notes, consisting of borrowings under the ~~New~~ Term Loan Facility of ~~$997.5~~$945.0 million, $0.0 drawn down on the ~~New~~ Revolving Credit Facility and $500.0 million in aggregate principal amount of Senior Secured Notes issued and outstanding.

At October ~~2, 2021~~1, 2022 and January ~~2, 2021,~~1, 2022, our debt consisted of both fixed and variable-rate instruments. Interest rate 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 11 “Derivative Instruments and Hedging” in the Notes to the Consolidated Financial Statements. The weighted average interest rate (which includes amortization of deferred financing costs and debt discount) on our outstanding debt, exclusive of the impact of the swaps then in effect, was approximately ~~5.29%~~4.98% and ~~7.03%~~5.11% per annum at October ~~2, 2021~~1, 2022 and January ~~2, 2021,~~1, 2022, respectively, based on interest rates on these dates. The weighted average interest rate (which includes amortization of deferred financing costs and debt discount) on our outstanding debt, including the impact of the swaps then in effect, was approximately ~~5.80%~~5.28% and ~~7.41%~~5.62% per annum at October ~~2, 2021~~1, 2022 and January ~~2, 2021,~~1, 2022, respectively, based on interest rates on these dates.

The following schedule sets forth our year-by-year debt obligations at October ~~2, 2021:~~1, 2022:

Our accumulated other comprehensive loss includes changes in the fair value of derivative instruments and the effects of foreign currency translations. At October 1, 2022 and October 2, 2021, ~~and September 26, 2020,~~ the cumulative balance of changes in the fair value of derivative instruments, net of taxes, was a gain of $9.9 million and a loss of $14.5 million, ~~and $23.3 million,~~ respectively. At October 1, 2022 and October 2, 2021, ~~and September 26, 2020,~~ the cumulative balance of the effects of foreign currency translations, net of taxes, was a loss of $21.2 million and a loss of $6.5 million, ~~and $12.3 million,~~ respectively.

We do not currently pay a 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 our Board of Directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants in our existing indebtedness, including the ~~New~~ Credit Agreement governing the ~~New~~ Credit Facilities and the ~~New~~ Indenture governing the Senior Secured 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, the addition of $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 months ended October 1, 2022 and October 2, 2021, ~~and September 26, 2020,~~ we repurchased no shares of our common stock under this program.

We define EBITDAS, a non-GAAP financial measure, as earnings before interest, taxes, depreciation, amortization and stock-based compensation and Adjusted EBITDAS, a non-GAAP financial measure, as earnings before interest, taxes, depreciation, amortization, stock-based compensation, franchise rights acquired and goodwill impairments, net restructuring charges and early extinguishment of ~~debt, restructuring charges (including the net impact where applicable) and goodwill impairment.~~debt.

The table below sets forth the reconciliations for EBITDAS and Adjusted EBITDAS, each a non-GAAP financial measure, to net (loss) income, the most comparable GAAP financial measure, for the three and nine months ended October 1, 2022 and October 2, 2021, ~~and September 26, 2020,~~ and EBITDAS and Adjusted EBITDAS to net ~~income~~loss for the trailing twelve months ended October ~~2, 2021:~~1, 2022:

Reducing leverage is a capital structure priority for the Company. As of October ~~2, 2021,~~1, 2022, our net debt/Adjusted EBITDAS ratio was ~~4.3x.~~5.2x.

The table below sets forth the reconciliation for net debt, a non-GAAP financial measure, to total debt, the most comparable GAAP financial measure, for the nine months ended:

We present EBITDAS, Adjusted EBITDAS and net debt/Adjusted EBITDAS because we consider them to be useful supplemental measures of our performance. In addition, we believe EBITDAS, Adjusted EBITDAS and net debt/Adjusted 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 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 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. Historically, we experience our highest level of recruitment during the first quarter of the year, which is supported with 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 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.

We use our corporate website at corporate.ww.com and certain social media channels such as our corporate Facebook page (www.facebook.com/WW), Instagram account (Instagram.com/WW) and Twitter account (@~~ww_us~~)(@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, 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 October ~~2, 2021,~~1, 2022, 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 ~~2020 as amended~~2021 have not materially changed from January ~~2, 2021.~~1, 2022.

At the end of the third quarter of fiscal ~~2021,~~2022, borrowings under the ~~New~~ Credit Facilities bore interest at LIBOR plus an applicable margin of 3.50%. For the ~~New~~ Term Loan Facility, the minimum interest rate for LIBOR applicable to such facility pursuant to the terms of the ~~New~~ Credit Agreement was set at 0.50%, referred to herein as the LIBOR Floor. In addition, as of October ~~2, 2021,~~1, 2022, our interest rate swaps in effect had an aggregate notional amount of $500.0 million. Accordingly, as of October ~~2, 2021,~~1, 2022, 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 swaps and the LIBOR Floor, a hypothetical 90 basis point increase in interest rates would have increased annual interest expense by approximately ~~$4.5~~$4.0 million ~~driven primarily by the interest rate applicable to our New Term Loan Facility. A~~and a hypothetical 90 basis point decrease in interest rates would have ~~resulted in no change to~~decreased annual interest expense by approximately $4.0 million. This increase and decrease would have been driven primarily by the ~~LIBOR Floor.~~interest rate applicable to our Term Loan Facility.

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 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 October ~~2, 2021,~~1, 2022, the end of the third quarter of fiscal ~~2021.~~2022. 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 quarter of fiscal ~~2021,~~2022, 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.

The information called for by this item is incorporated herein by reference to Note 10 “Legal” of the notes to the unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q.

There have been no material changes in the risk factors from those detailed in our Annual Report on Form 10-K for fiscal ~~2020 as amended.~~2021.


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	WW	The Nasdaq Stock Market LLC

		~~Page No.~~
		Page No.

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements		2

	Unaudited Consolidated Balance Sheets at October ~~2, 2021~~1, 2022 and January ~~2, 2021~~1, 2022		2

	Unaudited Consolidated Statements of Net Income for the three and nine months ended October 1, 2022 and October 2, 2021 ~~and September 26, 2020~~		3

	Unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended October 1, 2022 and October 2, 2021 ~~and September 26, 2020~~		4

	Unaudited Consolidated Statements of Changes in Total Deficit for the three and nine months ended October 1, 2022 and October 2, 2021 ~~and September 26, 2020~~		5

	Unaudited Consolidated Statements of Cash Flows for the nine months ended October 1, 2022 and October 2, 2021 ~~and September 26, 2020~~		76

	Notes to Unaudited Consolidated Financial Statements		87

Cautionary Notice Regarding Forward-Looking Statements			2726

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2928

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		5556

Item 4.	Controls and Procedures		5556

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings		5657

Item 1A.	Risk Factors		5657

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		5657

Item 3.	Defaults Upon Senior Securities		5657

Item 4.	Mine Safety Disclosures		5657

Item 5.	Other Information		5657

Item 6.	Exhibits		5758

Signatures			5859


	October 2,			January 2,			October 1,			January 1,
	2021			2021			2022			2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	188,230		$	165,887		$	188,291		$	153,794
Receivables (net of allowances: October 2, 2021 - $2,061 and January 2, 2021 - $2,298)		30,309			34,555
Receivables (net of allowances: October 1, 2022 - $1,693 and January 1, 2022 - $1,726)								28,192			29,321
Inventories		25,560			39,456			26,394			30,566
Prepaid income taxes		32,324			20,028			14,721			30,478
Prepaid marketing and advertising		3,897			15,656
Prepaid expenses and other current assets		20,600			23,610			32,161			27,014
TOTAL CURRENT ASSETS		300,920			299,192			289,759			271,173
Property and equipment, net		39,828			51,935			30,112			37,219
Operating lease assets		94,951			119,102			79,911			89,902
Franchise rights acquired		785,322			765,850			440,515			785,195
Goodwill		157,529			155,617			156,155			157,374
Other intangible assets, net		61,734			59,709			62,952			61,126
Deferred income taxes		12,169			13,625			15,772			11,259
Other noncurrent assets		15,431			16,144			17,659			15,686
TOTAL ASSETS	$	1,467,884		$	1,481,174		$	1,092,835		$	1,428,934
LIABILITIES AND TOTAL DEFICIT
CURRENT LIABILITIES
Portion of long-term debt due within one year	$	10,000		$	77,000
Portion of operating lease liabilities due within one year		21,231			28,551		$	18,457		$	20,297
Accounts payable		15,115			23,052			17,384			22,444
Salaries and wages payable		63,971			58,047			64,047			57,401
Accrued marketing and advertising		9,334			15,556			10,277			15,904
Accrued interest		10,958			2,710			10,848			5,085
Other accrued liabilities		44,130			48,615			37,318			45,728
Derivative payable		19,616			28,283			—			14,670
Income taxes payable		2,851			7,810			1,850			1,748
Deferred revenue		50,231			50,475			39,772			45,855
TOTAL CURRENT LIABILITIES		247,437			340,099			199,953			229,132
Long-term debt, net		1,458,329			1,408,800			1,421,239			1,418,104
Long-term operating lease liabilities		82,550			101,561			70,848			78,157
Deferred income taxes		162,960			173,713			58,293			157,718
Other		7,985			5,212			2,005			2,227
TOTAL LIABILITIES		1,959,261			2,029,385			1,752,338			1,885,338
TOTAL DEFICIT
Common stock, $0 par value; 1,000,000 shares authorized; 122,052 shares issued at October 2, 2021 and 121,470 shares issued at January 2, 2021		0			0
Treasury stock, at cost, 52,161 shares at October 2, 2021 and 52,497 shares at January 2, 2021		(3,127,295	)		(3,140,903	)
Common stock, $0 par value; 1,000,000 shares authorized; 122,052 shares issued at October 1, 2022 and 122,052 shares issued at January 1, 2022								0			0
Treasury stock, at cost, 51,667 shares at October 1, 2022 and 51,988 shares at January 1, 2022								(3,106,098	)		(3,120,149	)
Retained earnings		2,656,970			2,617,841			2,457,912			2,682,349
Accumulated other comprehensive loss		(21,052	)		(25,149	)		(11,317	)		(18,604	)
TOTAL DEFICIT		(491,377	)		(548,211	)		(659,503	)		(456,404	)
TOTAL LIABILITIES AND TOTAL DEFICIT	$	1,467,884		$	1,481,174		$	1,092,835		$	1,428,934


	Three Months Ended					Nine Months Ended				Three Months Ended					Nine Months Ended
	October 2,		September 26,			October 2,		September 26,		October 1,			October 2,		October 1,			October 2,
	2021		2020			2021		2020		2022			2021		2022			2021
Subscription revenues, net	$	262,401	$	282,310		$	815,092	$	899,964	$	220,746		$	262,401	$	718,122		$	815,092
Product sales and other, net		31,096		38,389			121,580		154,733		28,972			31,096		98,810			121,580
Revenues, net		293,497		320,699			936,672		1,054,697		249,718			293,497		816,932			936,672
Cost of subscription revenues		90,280		99,485			285,209		343,056		73,541			90,280		243,710			285,209
Cost of product sales and other		25,180		31,118			93,965		115,882		23,826			25,180		77,811			93,965
Cost of revenues		115,460		130,603			379,174		458,938		97,367			115,460		321,521			379,174
Gross profit		178,037		190,096			557,498		595,759		152,351			178,037		495,411			557,498
Marketing expenses		34,569		38,262			208,656		198,090		35,696			34,569		195,123			208,656
Selling, general and administrative expenses		63,745		59,192			206,615		225,509		58,443			63,745		193,320			206,615
Goodwill impairment		—		—			—		3,665
Operating income		79,723		92,642			142,227		168,495
Franchise rights acquired and goodwill impairments											312,741			—		339,161			—
Operating (loss) income											(254,529	)		79,723		(232,193	)		142,227
Interest expense		19,283		29,735			68,699		92,281		20,912			19,283		58,837			68,699
Other expense (income), net		764		(211	)		908		230
Other expense, net											1,344			764		3,303			908
Early extinguishment of debt		—		—			29,169		—		—			—		—			29,169
Income before income taxes		59,676		63,118			43,451		75,984
Provision for income taxes		13,346		8,604			6,488		13,546
Net income		46,330		54,514			36,963		62,438
Net loss attributable to the noncontrolling interest		—		11			—		30
Net income attributable to WW International, Inc.	$	46,330	$	54,525		$	36,963	$	62,468
Earnings per share attributable to WW International, Inc.
(Loss) income before income taxes											(276,785	)		59,676		(294,333	)		43,451
(Benefit from) provision for income taxes											(70,749	)		13,346		(75,431	)		6,488
Net (loss) income										$	(206,036	)	$	46,330	$	(218,902	)	$	36,963
(Net loss) earnings per share
Basic	$	0.66	$	0.80		$	0.53	$	0.92	$	(2.93	)	$	0.66	$	(3.12	)	$	0.53
Diluted	$	0.65	$	0.78		$	0.52	$	0.89	$	(2.93	)	$	0.65	$	(3.12	)	$	0.52
Weighted average common shares outstanding
Basic		69,875		68,013			69,516		67,697		70,383			69,875		70,258			69,516
Diluted		70,860		70,002			70,866		69,936		70,383			70,860		70,258			70,866

	Three Months Ended						Nine Months Ended
	October 2,			September 26,			October 2,			September 26,
	2021			2020			2021			2020
Net income	$	46,330		$	54,514		$	36,963		$	62,438
Other comprehensive (loss) gain:
Foreign currency translation (loss) gain		(4,877	)		4,004			(3,140	)		(827	)
Income tax benefit (expense) on foreign currency translation (loss) gain		1,229			(1,017	)		791			215
Foreign currency translation (loss) gain, net of taxes		(3,648	)		2,987			(2,349	)		(612	)
Gain (loss) on derivatives		1,891			2,125			8,617			(10,467	)
Income tax (expense) benefit on gain (loss) on derivatives		(477	)		(541	)		(2,171	)		2,673
Gain (loss) on derivatives, net of taxes		1,414			1,584			6,446			(7,794	)
Total other comprehensive (loss) gain		(2,234	)		4,571			4,097			(8,406	)
Comprehensive income		44,096			59,085			41,060			54,032
Net loss attributable to the noncontrolling interest		—			11			—			30
Foreign currency translation (gain) loss, net of taxes attributable to the noncontrolling interest		—			(1	)		—			93
Comprehensive loss attributable to the noncontrolling interest		—			10			—			123
Comprehensive income attributable to WW International, Inc.	$	44,096		$	59,095		$	41,060		$	54,155


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


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


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

			WW International, Inc.

													Accumulated
	Redeemable												Other
Three Months Ended October 2, 2021	Noncontrolling		Common Stock				Treasury Stock						Comprehensive			Retained
	Interest		Shares		Amount		Shares			Amount			Loss			Earnings			Total
Balance at July 3, 2021	$	—		122,052	$	0		52,211		$	(3,129,329	)	$	(18,818	)	$	2,610,250		$	(537,897	)
Comprehensive income (loss)		—												(2,234	)		46,330			44,096
Issuance of treasury stock under stock plans								(50	)		2,034						(3,014	)		(980	)
Compensation expense on share- based awards																	3,404			3,404
Balance at October 2, 2021	$	—		122,052	$	0		52,161		$	(3,127,295	)	$	(21,052	)	$	2,656,970		$	(491,377	)



Three Months Ended October 1, 2022											Accumulated
											Other
	Common Stock				Treasury Stock						Comprehensive			Retained
	Shares		Amount		Shares			Amount			Loss			Earnings			Total
Balance at July 2, 2022		122,052	$	0		51,691		$	(3,107,324	)	$	(10,602	)	$	2,661,818		$	(456,108	)
Comprehensive loss												(715	)		(206,036	)		(206,751	)
Issuance of treasury stock under stock plans						(24	)		1,226						(1,246	)		(20	)
Compensation expense on share-based awards															3,376			3,376
Balance at October 1, 2022		122,052	$	0		51,667		$	(3,106,098	)	$	(11,317	)	$	2,457,912		$	(659,503	)



Nine Months Ended October 1, 2022											Accumulated
											Other
	Common Stock				Treasury Stock						Comprehensive			Retained
	Shares		Amount		Shares			Amount			Loss			Earnings			Total
Balance at January 1, 2022		122,052	$	0		51,988		$	(3,120,149	)	$	(18,604	)	$	2,682,349		$	(456,404	)
Comprehensive (loss) income												7,287			(218,902	)		(211,615	)
Issuance of treasury stock under stock plans						(321	)		14,051						(15,897	)		(1,846	)
Compensation expense on share-based awards															10,362			10,362
Balance at October 1, 2022		122,052	$	0		51,667		$	(3,106,098	)	$	(11,317	)	$	2,457,912		$	(659,503	)



Nine Months Ended October 2, 2021											Accumulated
											Other
	Common Stock				Treasury Stock						Comprehensive			Retained
	Shares		Amount		Shares			Amount			Loss			Earnings			Total
Balance at January 2, 2021		121,470	$	0		52,497		$	(3,140,903	)	$	(25,149	)	$	2,617,841		$	(548,211	)
Comprehensive income												4,097			36,963			41,060
Issuance of treasury stock under stock plans						(336	)		13,608						(18,481	)		(4,873	)
Compensation expense on share-based awards															16,596			16,596
Issuance of common stock		582													4,051			4,051
Balance at October 2, 2021		122,052	$	0		52,161		$	(3,127,295	)	$	(21,052	)	$	2,656,970		$	(491,377	)


	October 1, 2022		January 1, 2022
Assets:
Operating lease assets	$	79,911	$	89,902
Finance lease assets		72		127
Total leased assets	$	79,983	$	90,029

Liabilities:
Current
Operating	$	18,457	$	20,297
Finance		38		75
Noncurrent
Operating	$	70,848	$	78,157
Finance		9		29
Total lease liabilities	$	89,352	$	98,558


	Operating Leases		Finance Leases		Total
Remainder of fiscal 2022	$	4,734	$	13	$	4,747
Fiscal 2023		24,872		31		24,903
Fiscal 2024		18,014		4		18,018
Fiscal 2025		12,575		—		12,575
Fiscal 2026		9,683		—		9,683
Fiscal 2027		9,376		—		9,376
Thereafter		36,089		—		36,089
Total lease payments	$	115,343	$	48	$	115,391
Less imputed interest		26,038		1		26,039
Present value of lease liabilities	$	89,305	$	47	$	89,352


	Three Months Ended October 1, 2022
	North		Continental		United
	America		Europe		Kingdom		Other		Total
Digital Subscription Revenues	$	102,735	$	43,638	$	5,693	$	3,815	$	155,881
Workshops + Digital Fees		52,113		7,586		3,764		1,402		64,865
Subscription Revenues, net	$	154,848	$	51,224	$	9,457	$	5,217	$	220,746
Product sales and other, net		21,234		5,272		1,441		1,025		28,972
Revenues, net	$	176,082	$	56,496	$	10,898	$	6,242	$	249,718


	Three Months Ended September 26, 2020										Nine Months Ended October 1, 2022
	North		Continental		United						North		Continental		United
	America		Europe		Kingdom		Other		Total		America		Europe		Kingdom		Other		Total
Digital Subscription Revenues	$	122,120	$	53,230	$	9,227	$	4,154	$	188,731	$	342,489	$	145,920	$	20,106	$	13,067	$	521,582
Workshops + Digital Fees		69,111		14,288		7,515		2,665		93,579		155,558		23,599		12,482		4,901		196,540
Subscription Revenues, net	$	191,231	$	67,518	$	16,742	$	6,819	$	282,310	$	498,047	$	169,519	$	32,588	$	17,968	$	718,122
Product sales and other, net		23,964		8,993		3,730		1,702		38,389		70,363		19,621		5,506		3,320		98,810
Revenues, net	$	215,195	$	76,511	$	20,472	$	8,521	$	320,699	$	568,410	$	189,140	$	38,094	$	21,288	$	816,932

	Nine Months Ended September 26, 2020
	North		Continental		United
	America		Europe		Kingdom		Other		Total
Digital Subscription Revenues	$	354,391	$	150,572	$	24,374	$	11,860	$	541,197
Workshops + Digital Fees		268,086		53,665		26,645		10,371		358,767
Subscription Revenues, net	$	622,477	$	204,237	$	51,019	$	22,231	$	899,964
Product sales and other, net		103,949		30,084		14,219		6,481		154,733
Revenues, net	$	726,426	$	234,321	$	65,238	$	28,712	$	1,054,697


	Deferred			Deferred
	Revenue			Revenue-Long Term
Balance as of January 1, 2022	$	45,855		$	28
Net (decrease) increase during the period		(6,083	)		11
Balance as of October 1, 2022	$	39,772		$	39

Balance as of January 2, 2021	$	50,475		$	44
Net decrease during the period		(244	)		(36	)
Balance as of October 2, 2021	$	50,231		$	8

Remainder of fiscal 2021	$	7,951
Fiscal 2022	$	25,946
Fiscal 2023	$	15,831
Fiscal 2024	$	5,647
Fiscal 2025 and thereafter	$	9,591


Remainder of fiscal 2022	$	8,223
Fiscal 2023	$	27,053
Fiscal 2024	$	16,687
Fiscal 2025	$	5,378
Fiscal 2026	$	845
Fiscal 2027	$	720
Thereafter	$	7,171


	October 1, 2022									January 1, 2022
	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 April 13, 2026	$	—	$	—	$	—		0.00	%	$	—	$	—	$	—		2.61	%
Term Loan Facility due April 13, 2028		945,000		6,098		12,638		5.15	%		945,000		6,930		14,362		4.48	%
Senior Secured Notes due April 15, 2029		500,000		5,025		—		4.65	%		500,000		5,604		—		4.70	%
Total	$	1,445,000	$	11,123	$	12,638		4.98	%	$	1,445,000	$	12,534	$	14,362		5.15	%
Less: Current portion		—									—
Unamortized deferred financing costs		11,123									12,534
Unamortized debt discount		12,638									14,362
Total long-term debt	$	1,421,239								$	1,418,104


			Fair Value
	Balance Sheet Classification	Balance Sheet Location	October 1, 2022		January 1, 2022
Assets:
Interest rate swaps - current swaps	Current asset	Prepaid expenses and other current assets	$	8,631	$	—
Interest rate swaps - current swaps	Noncurrent asset	Other noncurrent assets		4,513		—
Total assets			$	13,144	$	—

Liabilities:
Interest rate swaps - current swaps	Current liability	Derivative payable	$	—	$	14,670
Total liabilities			$	—	$	14,670

			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 October 2, 2021	$	19,616	$	—	$	19,616	$	—
Interest rate swap liability at January 2, 2021	$	28,283	$	—	$	28,283	$	—


	Nine Months Ended October 1, 2022
	(Loss) Gain on Qualifying Hedges			Loss on Foreign Currency Translation			Total
Beginning balance at January 1, 2022	$	(10,843	)	$	(7,761	)	$	(18,604	)
Other comprehensive income (loss) before reclassifications, net of tax		17,350			(13,488	)		3,862
Amounts reclassified from accumulated other comprehensive loss, net of tax (2)		3,425			—			3,425
Net current period other comprehensive income (loss)		20,775			(13,488	)		7,287
Ending balance at October 1, 2022	$	9,932		$	(21,249	)	$	(11,317	)

	Nine Months Ended October 2, 2021
	Loss on Qualifying Hedges			Loss on Foreign Currency Translation			Total
Beginning balance at January 2, 2021	$	(20,979	)	$	(4,170	)	$	(25,149	)
Other comprehensive income (loss) before reclassifications, net of tax		418			(2,349	)		(1,931	)
Amounts reclassified from accumulated other comprehensive loss, net of tax^(b)		6,028			—			6,028
Net current period other comprehensive income (loss)		6,446			(2,349	)		4,097
Ending balance at October 2, 2021	$	(14,533	)	$	(6,519	)	$	(21,052	)


									Total Revenues, net				Total Revenues, net
	Total Revenues, net				Total Revenues, net				Three Months Ended				Nine Months Ended
	Three Months Ended				Nine Months Ended				October 1,		October 2,		October 1,		October 2,
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020		2022		2021		2022		2021
North America	$	197,797	$	215,195	$	626,742	$	726,426	$	176,082	$	197,797	$	568,410	$	626,742
Continental Europe		71,933		76,511		231,764		234,321		56,496		71,933		189,140		231,764
United Kingdom		15,666		20,472		51,735		65,238		10,898		15,666		38,094		51,735
Other		8,101		8,521		26,431		28,712		6,242		8,101		21,288		26,431
Total revenues, net	$	293,497	$	320,699	$	936,672	$	1,054,697	$	249,718	$	293,497	$	816,932	$	936,672


	Depreciation and Amortization				Depreciation and Amortization
	Three Months Ended				Nine Months Ended
	October 1,		October 2,		October 1,		October 2,
	2022		2021		2022		2021
North America	$	7,939	$	9,635	$	24,738	$	29,752
Continental Europe		166		340		599		1,171
United Kingdom		109		160		475		639
Other		87		96		273		312
Total segment depreciation and amortization		8,301		10,231		26,085		31,874
General corporate depreciation and amortization		3,532		2,200		11,049		10,183
Depreciation and amortization	$	11,833	$	12,431	$	37,134	$	42,057

	Fiscal	Fiscal
	2021	2020
Debt-Free Cumulative Annual Cash Flow Growth Rate	0.2% to 2.6%	4.0% to 13.9%
Discount Rate	8.5%	9.5%


	October 2,			January 2,			Increase/			October 1,			January 1,			Increase/
	2021			2021			(Decrease)			2022			2022			(Decrease)
	(in millions)									(in millions)
Total current assets	$	300.9		$	299.2		$	1.7		$	289.8		$	271.2		$	18.6
Total current liabilities		247.4			340.1			(92.7	)		200.0			229.1			(29.2	)
Working capital surplus (deficit)		53.5			(40.9	)		(94.4	)
Working capital surplus											89.8			42.0			(47.8	)
Cash and cash equivalents		188.2			165.9			22.3			188.3			153.8			34.5
Current portion of long-term debt		10.0			77.0			(67.0	)
Working capital deficit, excluding cash and cash equivalents and current portion of long-term debt	$	(124.7	)	$	(129.8	)	$	(5.0	)
Working capital deficit, excluding cash and cash equivalents										$	(98.5	)	$	(111.8	)	$	(13.3	)


	Balance		October 1, 2022
Term Loan Facility due April 13, 2028	$	997.5	$	945.0
Senior Secured Notes due April 15, 2029		500.0		500.0
Total		1,497.5		1,445.0
Less: Current portion		10.0		—
Unamortized deferred financing costs		13.4		11.1
Unamortized debt discount		15.8		12.6
Total long-term debt	$	1,458.3	$	1,421.2


	October 2, 2021		October 1, 2022
Total debt	$	1,497.5	$	1,445.0
Less: Unamortized deferred financing costs		13.4		11.1
Less: Unamortized debt discount		15.8		12.6
Less: Cash on hand		188.2		188.3
Net debt	$	1,280.1	$	1,232.9