GNC 2008 Annual Report Download - page 12

Table of Contents
Business Segments
We generate revenues from our three business segments, Retail, Franchise, and Manufacturing/Wholesale. The following chart outlines
our business segments and the historical contribution to our consolidated revenues by those segments, after intercompany eliminations. For a
description of operating income (loss) by business segment, our total assets by business segment, total revenues by geographic area, and total
assets by geographic area, see the "Segments" note to our consolidated financial statements included in this report.
Year ended December 31,
2007 2006 2005
(dollars in millions)
Retail $ 1,168.6 75.3% $ 1,122.7 75.5% $ 989.5 75.1%
Franchise 241.1 15.5% 232.3 15.6% 212.8 16.1%
Manufacturing/Wholesale
(Third Party) 143.1 9.2% 132.1 8.9% 115.4 8.8%
Total $ 1,552.8 100.0% $ 1,487.1 100.0% $ 1,317.7 100.0%
Retail
Our Retail segment generates revenues primarily from sales of products to customers at our company-owned stores in the United States
and Canada, and in December 2005 we started selling products through our website, www.gnc.com.
Locations
As of December 31, 2007, we operated 2,745 company-owned stores across all 50 states and in Canada, Puerto Rico, and Washington,
D.C. Most of our U.S. company-owned stores are between 1,000 and 2,000 square feet and are located primarily in shopping malls and strip
shopping centers. Traditional mall and strip center locations typically generate a large percentage of our total retail sales. With the exception of
our downtown stores, all of our company-owned stores follow one of two consistent formats, one for mall locations and one for strip shopping
center locations. Our store graphics are periodically redesigned to better identify with our GNC customers and provide product information to
allow the consumer to make educated decisions regarding product purchases and usage. Our product labeling is consistent within our product
lines and the stores are designed to present a unified approach to packaging with emphasis on added information for the consumer. As an on-
going practice, we continue to reset and upgrade all of our company-owned stores to maintain a more modern and customer-friendly layout,
while promoting our GNC Live Well theme.
Franchise
Our Franchise segment is comprised of our domestic and international franchise operations. Our Franchise segment generates revenues
from franchise activities primarily through product sales to franchisees, royalties on franchise retail sales, and franchise fees.
As a means of enhancing our operating performance and building our store base, we began opening franchised locations in 1988. As of
December 31, 2007, there were 2,056 franchised stores operating, including 978 stores in the United States and 1,078 stores operating in 49
international locations. Approximately 89% of our franchised stores in the United States are in strip shopping centers and are typically between
1,000 and 2,000 square feet. The international franchised stores are typically smaller and, depending upon the country and cultural
preferences, are located in mall, strip center, street, or store-within-a-store locations. Typically, our international stores have a store format and
signage similar to our U.S. franchised stores. To assist our franchisees in the successful operation of their stores and to protect our brand
image, we offer site selection, construction assistance, accounting services, and
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