GNC 2009 Annual Report Download - page 7

Table of Contents
As a result of the Merger, GNC Acquisition Holdings Inc. became the sole equity holder of GNC Parent LLC and the ultimate parent
company of both GNC Corporation, our direct parent company, and us. The outstanding capital stock of GNC Acquisition Holdings Inc. is
beneficially owned by affiliates of Ares Management LLC ("Ares") and Ontario Teachers' Pension Plan Board ("OTPP"), certain institutional
investors, certain of our directors, and certain former stockholders of GNC Parent Corporation, including members of our management. Refer to
Note 1, "Nature of Business," to our consolidated financial statements included in this report for additional information.
GNC Parent Corporation was formed in November 2006 to acquire all the outstanding common stock of GNC Corporation.
General Nutrition Centers, Inc. was formed in October 2003 and GNC Corporation was formed as a Delaware corporation in November 2003
by Apollo Management V, L.P. ("Apollo"), an affiliate of Apollo Management V, L.P. and members of our management to acquire General
Nutrition Companies, Inc. from Numico USA, Inc., a wholly owned subsidiary of Koninklijke (Royal) Numico N.V. (collectively, "Numico"). In
December 2003, we purchased all of the outstanding equity interests of General Nutrition Companies, Inc.
General Nutrition Companies, Inc. was founded in 1935 by David Shakarian who opened its first health food store in Pittsburgh,
Pennsylvania. Since that time, the number of stores has continued to grow, and General Nutrition Companies, Inc. began producing its own
vitamin and mineral supplements as well as foods, beverages, and cosmetics. General Nutrition Companies, Inc. was acquired in August 1999
by Numico Investment Corp. and, prior to its acquisition, was a publicly traded company listed on the Nasdaq National Market.
Industry Overview
We operate within the large and growing U.S. nutritional supplements retail industry. According to Nutrition Business Journal's Supplement
Business Report 2008, our industry generated an estimated $23.7 billion in sales in 2007 and an estimated $25.2 billion in 2008, and is
projected to grow at an average annual rate of approximately 6% per year for at least the next five years. Our industry is also highly
fragmented, and we believe this fragmentation provides large operators, like us, the ability to compete more effectively due to scale
advantages.
We expect several key demographic, healthcare, and lifestyle trends to drive the continued growth of our industry. These trends include:
• Increased Focus on Healthy Living: Consumers are leading more active lifestyles and becoming increasingly focused on healthy living,
nutrition, and supplementation. According to the Nutrition Business Journal, a study by the Hartman Group found that 85% of the
American population today is involved to some degree in health and wellness compared to 70% to 75% a few years ago. We believe
that growth in the nutritional supplements industry will continue to be driven by consumers who increasingly embrace health and
wellness as a critical part of their lifestyles.
• Aging Population: The average age of the U.S. population is increasing. U.S. Census Bureau data indicates that the number of
Americans age 65 or older is expected to increase by approximately 56% from 2000 to 2020. We believe that these consumers are
significantly more likely to use nutritional supplements, particularly VMHS products, than younger persons and have higher levels of
disposable income to pursue healthy lifestyles.
• Rising Healthcare Costs and Use of Preventive Measures: Healthcare related costs have increased substantially in the United States.
A report released by Kaiser Family Foundation and the Health Research and Educational Trust in 2008 found that since 2000 the
worker contribution for a family health insurance policy had risen 107%. To reduce medical costs and avoid the complexities of dealing
with the healthcare system, and given increasing incidence of medical problems and concern over the use and effects of prescription
drugs, many consumers take preventive measures, including alternative medicines and nutritional supplements.
2