Weight Watchers International, Inc. is a Virginia corporation with its principal executive offices in New York, New York. In this Quarterly Report on Form 10-Q unless the context indicates otherwise: "we," "us," "our" and the "Company" refer to Weight Watchers International, Inc. and all of its subsidiaries consolidated for purposes of its financial statements, including WeightWatchers.com, Inc. and all of its subsidiaries; "Weight Watchers International" and "WWI" refer to Weight Watchers International, Inc. and all of its subsidiaries other than WeightWatchers.com, Inc. and all of its subsidiaries; "WW.com" refers to WeightWatchers.com, Inc. and all of its subsidiaries; "NACO" refers to our North American Company-owned meeting operations; and "China Joint Venture" refers to Weight Watchers Danone China Limited and all of its subsidiaries.

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 2006" refers to our fiscal year ended December 30, 2006;

• "fiscal 2007" refers to our fiscal year ended December 29, 2007;

• "fiscal 2008" refers to our fiscal year ended January 3, 2009;

• "fiscal 2009" refers to our fiscal year ended January 2, 2010;

• "fiscal 2010" refers to our fiscal year ended January 1, 2011;

• "fiscal 2011" refers to our fiscal year ended December 31, 2011;

• "fiscal 2012" refers to our fiscal year ended December 29, 2012; and

• "fiscal 2013" refers to our fiscal year ended December 28, 2013.

The following terms used in this Quarterly Report on Form 10-Q are our trademarks: Weight Watchers® and WeightWatchers.com®.

You should read the following discussion in conjunction with our Annual Report on Form 10-K for fiscal 2008 that includes additional information about us, our results of operations, our financial position and our cash flows, and with our unaudited consolidated financial statements and related notes included in Item 1 of this Quarterly Report on Form 10-Q (collectively, the "Consolidated Financial Statements").

NON-GAAP FINANCIAL MEASURES

To supplement the Company's consolidated statements of operations presented in accordance with accounting principles generally accepted in the United States, or GAAP, the Company has disclosed non-GAAP measures of operating results that exclude or adjust certain items. Net revenues, operating income, net income, diluted earnings per share and other GAAP measures are discussed in this Quarterly Report on Form 10-Q as reported (on a GAAP basis), excluding the impact of the previously disclosed cost savings initiatives from our fiscal 2009 results, and adjusting the fiscal 2008 results to exclude the impact of the previously reported adverse U.K. VAT ruling. Management believes these non-GAAP financial measures provide useful supplemental information to investors regarding the performance of the Company's business and are useful for period-over-period comparisons of the performance of the Company's business. While the Company believes that these financial measures are useful in evaluating the Company's 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. See "Results of Operations for the Nine Months Ended October 3, 2009 Compared to the Nine Months Ended September 27, 2008" below for a reconciliation of the non-GAAP financial measures excluding the impact of the cost savings initiatives from our fiscal 2009 results and excluding the impact of the adverse U.K. VAT ruling for certain prior periods from our fiscal 2008 results to the most directly comparable GAAP measures.

USE OF CONSTANT CURRENCY

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

CRITICAL ACCOUNTING POLICIES

For a discussion of the critical accounting policies affecting us, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies" of our Annual Report on Form 10-K for fiscal 2008. Our critical accounting policies have not changed since the end of fiscal 2008.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED OCTOBER 3, 2009 COMPARED TO THE
THREE MONTHS ENDED SEPTEMBER 27, 2008

The table below shows our consolidated statements of operations for the three
months ended October 3, 2009 versus the three months ended September 27, 2008.



                                                     (In millions, except per share amounts)
                                                  Three Months                    Three Months
                                                      Ended                          Ended
                                                 October 3, 2009               September 27, 2008
Revenues, net                                   $           324.5             $              352.6
Cost of revenues                                            146.5                            158.2

Gross profit                                                178.0                            194.4
Marketing expenses                                           35.8                             40.0
Selling, general and administrative
expenses                                                     41.0                             46.6

Operating income                                            101.2                            107.8
Interest expense                                             16.7                             21.3
Other (income)/expense, net                                  (0.5 )                            1.2

Income before income taxes                                   85.0                             85.3
Provision for income taxes                                   33.0                             33.1

Net income                                                   52.0                             52.2
Net loss attributable to the
noncontrolling interest                                       0.6                              0.5

Net income attributable to Weight Watchers
International, Inc.                             $            52.6             $               52.7


Weighted average diluted shares
outstanding                                                  77.2                             78.1


Diluted EPS attributable to Weight
Watchers International, Inc.                    $            0.68             $               0.67

Fiscal 2009 third quarter revenues of $324.5 million declined 8.0% compared to $352.6 million in the comparable period of fiscal 2008. Part of the decline in the quarter versus the prior year period resulted from unfavorable foreign currency exchange rates which reduced revenues by 3.3%, or $11.5 million. In the third quarter of fiscal 2009, the average exchange rate from the British pound to the U.S. dollar dropped by 13.3% versus the prior year period, from 1.8903 to 1.6386, and the average exchange rate from the Euro to the U.S. dollar dropped by 4.5% versus the prior year period, from 1.5017 to 1.4338. On a constant currency basis, third quarter fiscal 2009 revenues declined 4.7% versus the prior year period. This compares to a decline in revenues on a constant currency basis of 7.0% in the second quarter of fiscal 2009 versus the prior year period as adjusted to exclude the impact of the $30.3 million offset to revenue recorded in connection with the U.K. VAT ruling related to periods prior to the second quarter of fiscal 2008. Similar to the economic environment we have been experiencing all year, consumer discretionary spending in the third quarter of fiscal 2009 remained depressed. The improvement in trend in our revenue performance versus prior year periods from second to third quarter of fiscal 2009, while likely partially the result of some relative improvement in the economic environment, we believe was primarily driven by business actions such as certain promotional activities.

Net income for the third quarter of fiscal 2009 of $52.6 million decreased slightly, by $0.1 million, or 0.2%, from $52.7 million in the third quarter of fiscal 2008. Diluted earnings per share for the third quarter of fiscal 2009 were $0.68 as compared to $0.67 in the third quarter of fiscal 2008. After taking into account the negative impact of foreign currency exchange rates, which reduced earnings by $0.03 per share, diluted earnings per share for the third quarter of fiscal 2009 were $0.71, an increase of 6.0% from $0.67 in the comparable prior year quarter.

Components of Revenue and Volumes

For the third quarter of fiscal 2009, global meeting fees were $191.5 million, a decrease of $21.7 million, or 10.2%, from the prior year period. On a constant currency basis, fiscal 2009 third quarter global meeting fees as compared to the prior year period declined $15.2 million, or 7.1%, as difficult economic conditions worldwide continued to impact our business.

Global meeting paid weeks were 20.3 million in the third quarter of fiscal 2009 versus 21.1 million in the prior year period, a 3.8% decline. Global attendance in the third quarter of fiscal 2009 declined at a higher rate of 7.4% versus the prior year period, to 12.2 million in the third quarter of fiscal 2009 versus 13.1 million in the third quarter of fiscal 2008. It is generally acknowledged that consumers have significantly reduced their discretionary spending as a result of economic conditions. We believe this has had the impact of deferring weight loss efforts on the part of some consumers. The decline in global attendance in the third quarter of fiscal 2009 versus the prior year period was, however, an improvement in trend as compared to our second quarter fiscal 2009 global attendance. The second quarter fiscal 2009 global attendance was 12.3% below the prior year period partially as a result of the shift of the Easter holiday timing. The improvement in trend was primarily the result of 6.0% attendance volume growth in the United Kingdom in the third quarter of fiscal 2009 versus the comparable prior year period, fueled by expanded marketing activity and promotions.

The global average meeting fee per attendee in the third quarter of fiscal 2009, which declined 3.0% versus the prior year period including the negative impact of foreign currency translation, increased only marginally on a constant currency basis by 0.3% versus the prior year period. Introductory promotional pricing for Monthly Pass in the United States, which had a beneficial impact on enrollment trends, reduced our average meeting fee per attendee, offsetting the impact of higher average meeting fee per attendee internationally which was driven by increasing acceptance of Monthly Pass in our international markets. As Monthly Pass penetration increases in a market, it typically drives an increase in average meeting fee per attendee because not all members who purchase it will attend all meetings for which they have paid.

In NACO, meeting fees for the third quarter of fiscal 2009 were $126.3 million, a decline of $19.3 million, or 13.3%, from $145.6 million for the third quarter of fiscal 2008. For the full quarter, attendances of 7.2 million and paid weeks of 12.8 million declined versus the prior year period by 11.1% and 10.6%, respectively. In September 2009, NACO launched its first new major price promotion other than a free registration promotion which has been part of our seasonal marketing campaigns for many years. This new promotion lowered our third quarter fiscal 2009 meeting fees by approximately 1.0%, but had an immediate, positive effect on our enrollment trends and on shifting members from the pay-as-you-go payment model into Monthly Pass. Members who purchase Monthly Pass on average have a longer tenure and are thus more profitable to us. We believe that the benefits of this promotion will be realized in future quarters.

Our international meeting fees were $65.2 million for the third quarter of fiscal 2009, a decrease of $2.4 million, or 3.6%, from the prior year period, but an increase of $3.7 million, or 5.5%, on a constant currency basis. While international meeting fee per attendee declined 2.2% for the third quarter of fiscal 2009 versus the prior year period, international meeting fee per attendee on a constant currency basis grew 7.0% which was driven by Monthly Pass in the United Kingdom, Germany and France. This growth mitigated the impact on revenue of an overall international attendance decline of 1.4% in the third quarter of fiscal 2009 versus the prior year period. Monthly Pass was also the primary driver of a 10.6% increase in total paid weeks in our international meeting business in the third quarter of fiscal 2009 versus the prior year period, with paid weeks in the United Kingdom up 17.1% and in Continental Europe up 4.8%.

Global product sales for the third quarter of fiscal 2009 were $61.2 million, a decline of $7.4 million, or 10.8%, from $68.6 million in the third quarter of fiscal 2008. Global in-meeting product sales per attendee declined 2.5% in the third quarter of fiscal 2009 versus the prior year period, but increased 2.6% on a constant currency basis. As a result of lower attendances, NACO's third quarter fiscal 2009 in-meeting product sales of $26.8 million declined versus the prior year period by 5.3%, or $1.5 million; however, in-meeting product sales per attendee increased 6.5% versus the prior year period, primarily as a result of new consumable product launches. International in-meeting product sales per attendee declined

12.6% in the third quarter of fiscal 2009 versus the prior year period and declined 3.6% on a constant currency basis. In Continental Europe, we are in the pre-launch stage for a new program innovation which we expect to launch by the end of 2009. This decline in in-meeting product sales per attendee reflects our planned run down of inventory in Continental Europe in preparation for the upcoming launch of this new program innovation. In contrast, our other international markets showed growth on a constant currency basis. International product sales in total were $29.6 million in the third quarter of fiscal 2009, a decline of 14.0% versus the prior year period, or 5.5% on a constant currency basis.

Internet revenues, which include subscription revenues from sales of WeightWatchers Online and WeightWatchers eTools as well as Internet advertising revenues, grew $2.0 million, or 4.2%, to $49.7 million for the third quarter of fiscal 2009 from $47.7 million for the third quarter of fiscal 2008. On a constant currency basis, Internet revenues rose 6.7% in the third quarter of fiscal 2009 versus the prior year period. Promotional activities in some of our international countries helped to drive third quarter fiscal 2009 online sign-up growth of 10.1% versus the prior year period. End-of-period active Weight Watchers Online subscribers increased 9.3%, from 755,000 at September 27, 2008 to 825,000 at October 3, 2009.

Other revenue, comprised primarily of licensing revenues and revenues from our publications, was $19.2 million for the third quarter of fiscal 2009, a decrease of $0.6 million, or 3.0%, from $19.8 million in the third quarter of fiscal 2008. Excluding the negative impact of foreign currency, other revenues were up 1.2%, slightly higher than the prior year period. Our global licensing revenues in the third quarter of fiscal 2009 decreased 5.6% on an as reported basis and 1.3% on a constant currency basis versus the prior year period. NACO licensing revenues declined 11.4% in the third quarter of fiscal 2009 versus the prior year period; however, excluding revenues from two of our licensing partners, one with whom we restructured our relationship and the other who experienced a change in ownership, NACO licensing revenues in the third quarter of fiscal 2009 would have increased versus the prior year period. While international licensing revenues declined 1.5% in the third quarter of fiscal 2009 versus the prior year period, international licensing revenues on a constant currency basis increased 8.0% versus the prior year period, with the United Kingdom maintaining strong performance, but some of our Continental European countries continuing to be especially impacted by the weak economy.

Franchise royalties for the third quarter of fiscal 2009 were $1.9 million in the United States and $1.0 million internationally. Total franchise royalties of $2.9 million were 13.3% lower in the third quarter of fiscal 2009 versus the prior year period, or 12.4% lower in constant currency, reflecting the weakened U.S. economy.

Expenses and Margins

Cost of revenues was $146.5 million for the third quarter of fiscal 2009, a decrease of $11.7 million, or 7.4%, from $158.2 million for the third quarter of fiscal 2008. Gross profit margin was 54.9% in the third quarter of fiscal 2009 as compared to 55.1% in the third quarter of fiscal 2008. The decline in the gross margin that resulted from a combination of lower attendance per meeting and in-meeting product promotions, mainly in NACO, was mostly offset by gross margin expansion in WW.com and the positive impact of Monthly Pass on international meeting revenue per attendee.

Marketing expenses for the third quarter of fiscal 2009 decreased $4.2 million, or 10.5%, to $35.8 million, from $40.0 million for the third quarter of fiscal 2008. Excluding the impact of foreign currency, marketing expenses decreased $3.3 million, or 8.1%, in the third quarter of fiscal 2009 versus the prior year period partially as a result of advertising rate efficiencies. In addition, in Continental Europe, we shifted marketing expenses in fiscal 2009 from the third quarter to the fourth quarter in further support of the launch of our new program innovation. Marketing expenses as a percentage of revenues decreased to 11.0% in the third quarter of fiscal 2009 as compared to 11.3% in the prior year period.

Selling, general and administrative expenses were $41.0 million for the third quarter of fiscal 2009 versus $46.6 million for the third quarter of fiscal 2008, a decrease of $5.6 million, or 12.0%, or 9.6% on a constant currency basis. Selling, general and administrative expenses were 12.6% of revenues in the

third quarter of fiscal 2009 versus 13.2% in the prior year period. Our restructuring and other cost saving efforts have continued to benefit the Company in the third quarter of fiscal 2009 and will continue throughout the year.

Our operating income for the third quarter of fiscal 2009 was $101.2 million, a decrease of $6.6 million, or 6.1%, from $107.8 million in the third quarter of fiscal 2008. On a constant currency basis, fiscal 2009 third quarter operating income decreased $2.9 million, or 2.7%, versus the prior year period. Our operating income margin for the third quarter of fiscal 2009 was 31.2%, an increase of 60 basis points versus 30.6% in the third quarter of fiscal 2008. This margin expansion resulted from lower marketing and selling, general and administrative expenses as a percentage of revenues.

Interest expense was $16.7 million for the third quarter of fiscal 2009, a decrease of $4.6 million, or 21.6%, from $21.3 million in the third quarter of fiscal 2008. We benefited from a lower LIBOR during the third quarter of fiscal 2009 which resulted in a 91 basis point reduction in our average effective interest rate, a decline from 5.10% in the third quarter of fiscal 2008 to 4.19% in the third quarter of fiscal 2009. During the third quarter of fiscal 2009, we repaid $55.6 million of our debt outstanding, and at the end of the third quarter of fiscal 2009, we had $1.475 billion debt outstanding as compared to $1.648 billion at the end of fiscal 2008.

For the third quarter of fiscal 2009, we reported other income of $0.5 million, as compared to other expense of $1.2 million in the third quarter of fiscal 2008. The change resulted primarily from the impact of foreign currency exchange rates on intercompany transactions.

The effective tax rate on our results for the third quarter of fiscal 2009 was 38.9%, the same rate as the third quarter of fiscal 2008.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED OCTOBER 3, 2009 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 27, 2008

For the first nine months of fiscal 2009, our reported revenues were $1,087.6 million, a decrease of $102.1 million, or 8.6%, as compared to the prior year period. Net income for the first nine months of fiscal 2009 was $158.6 million, an increase of $1.9 million, or 1.2%, from $156.7 million for the prior year period.

The table below shows our consolidated statements of operations for the nine months ended October 3, 2009 versus the nine months ended September 27, 2008 on both a GAAP basis and an adjusted basis to further the understanding of our financial results. See discussion of "Non-GAAP Financial Measures" above. In adjusting the statements of operations, we have reflected the impact of two factors: first, in the first nine months of fiscal 2008, we recorded a $27.9 million offset to revenue, which represented the portion of the previously reported adverse U.K. VAT ruling pertaining to periods prior to the first nine months of fiscal 2008; and second, in the first nine months of fiscal 2009, we recorded $5.1 million of restructuring charges associated with the cost savings initiatives previously announced in the first quarter of fiscal 2009. The "As Adjusted" amounts in the table below eliminate these items from both years.

                                                       Nine Months Ended October 3, 2009                          Nine Months Ended September 27, 2008
                                                                                                                                 Impact of
                                                As                 Impact of                As                   As               U.K. VAT           As
                                             Reported            Restructuring         Adjusted  (1)          Reported             Ruling       Adjusted  (1)
Revenues, net                              $    1,087.6        $              -       $       1,087.6      $      1,189.7        $     27.9    $       1,217.6
Cost of revenues                                  490.0                       -                 490.0               539.3                -               539.3

Gross profit                                      597.6                       -                 597.6               650.4              27.9              678.3
Marketing expenses                                163.5                       -                 163.5               186.6                -               186.6
Selling, general and administrative
expenses                                          127.7                     (5.1 )              122.6               138.7                -               138.7

Operating income                                  306.4                      5.1                311.5               325.1              27.9              353.0
Interest expense                                   50.4                       -                  50.4                68.2                -                68.2
Other income, net                                  (0.4 )                     -                  (0.4 )              (1.3 )              -                (1.3 )

Income before income taxes                        256.4                      5.1                261.5               258.2              27.9              286.1
Provision for income taxes                         99.7                      2.0                101.7               102.7               9.0              111.7

Net income                                        156.7                      3.1                159.8               155.5              18.9              174.4
Net loss attributable to the
noncontrolling interest                             1.9                       -                   1.9                 1.2                -                 1.2

Net income attributable to Weight
Watchers International, Inc.               $      158.6        $             3.1      $         161.7      $        156.7        $     18.9    $         175.6


Weighted average diluted shares
outstanding                                        77.1                     77.1                 77.1                79.0              79.0               79.0


Diluted EPS attributable to Weight
Watchers International, Inc.               $       2.06        $            0.04      $          2.10      $         1.98        $     0.24    $          2.22

(1) With respect to the above table, "As Adjusted" is a non-GAAP financial measure that adjusts the consolidated statements of operations to exclude the impact of restructuring charges from the results of operations for the nine months ended October 3, 2009 and exclude the impact of the U.K. VAT ruling pertaining to periods prior to fiscal 2008 from the results of operations for the nine months ended September 27, 2008. See "Non-GAAP Financial Measures" above for an explanation of our use of non-GAAP financial measures.

After adjusting the first nine months of fiscal 2008 revenues for the U.K. VAT ruling, revenues for the first nine months of fiscal 2009 of $1,087.6 million declined 10.7% compared to $1,217.6 million in the comparable period of fiscal 2008. The largest component of the decline in revenues in the first nine months of fiscal 2009 versus the prior year period was the unfavorable impact of foreign currency exchange rates, which reduced our revenues by $75.9 million, or 6.2%. In the first nine months of fiscal 2009, the average exchange rate from the British pound to the U.S. dollar dropped by 20.5% versus the prior year period, from 1.9465 to 1.5472, and the average exchange rate from the Euro to the U.S. dollar dropped by 10.0% versus the prior year period, from 1.5211 to 1.3692.

. . .