GNC 2010 Annual Report Download - page 11

Table of Contents
Products
We offer a wide range of high-quality nutritional supplements sold under our GNC proprietary brand names, including Mega Men, Ultra
Mega, WELLbeING, Pro Performance, Pro Performance AMP and Preventive Nutrition, and under nationally recognized third-party brand
names. We report our sales in four major nutritional supplement categories: VMHS; sports nutrition; diet; and other wellness. We offer an
extensive mix of brands and products, including over 1,800 active SKUs across multiple categories. This variety is designed to provide our
customers with a vast selection of products to fit their specific needs. Sales of our proprietary brands at our company-owned stores represented
approximately 56% of our net retail product revenues for 2009, 51% for 2008, and 48% for 2007.
Consumers may purchase a GNC Gold Card in any U.S. GNC store or at www.gnc.com for $15.00. A Gold Card allows a consumer to
save 20% on all store and on-line purchases on the day the card is purchased and during the first seven days of every month for a year. Gold
Card members also receive personalized mailings and e-mails with product news, nutritional information, and exclusive offers.
Products are delivered to our retail stores through our distribution centers located in Leetsdale, Pennsylvania; Anderson, South Carolina;
and Phoenix, Arizona. Our distribution centers support our company-owned stores as well as franchised stores and Rite Aid locations. Our
distribution fleet delivers our finished goods and third-party products through our distribution centers to our company-owned and domestic
franchised stores on a weekly or biweekly basis depending on the sales volume of the store. Each of our distribution centers has a quality
control department that monitors products received from our vendors to ensure they meet our quality standards.
Based on data collected from our point-of-sale systems, excluding certain required accounting adjustments of $5.7 million for 2009,
$4.7 million for 2008, $5.0 million for the period from March 16 to December 31, 2007, and $(0.6) million for the period from January 1 to
March 15, 2007, below is a comparison of our company-owned domestic store retail product sales by major product category and the
percentages of our company-owned domestic store retail product sales for the periods shown:
Successor Combined
Year ended December 31,
U.S Retail Product Categories: 2009 2008 2007
(dollars in millions)
VMHS Products $ 496.4 42.7% $ 465.2 41.3% $ 441.2 40.7%
Sports Nutrition Products 443.4 38.2% 410.1 36.4% 387.0 35.7%
Diet Products 128.0 11.0% 148.2 13.2% 156.7 14.6%
Other Wellness Products 94.3 8.1% 102.0 9.1% 98.0 9.0%
Total U.S. Retail revenues $ 1,162.1 100.0% $ 1,125.5 100.0% $ 1,082.9 100.0%
The data above represents the majority of the revenue reported for the domestic portion of our retail segment. In addition to these sales,
additional revenue and revenue adjustments are recorded to ensure conformity with GAAP. This includes wholesale sales revenue (to our
military commissary locations), deferral of our Gold Card revenue to match the twelve month discount period of the card, and a reserve for
customer returns. These items are recurring in nature, and we expect to record similar adjustments in the future.
VMHS
We sell vitamins and minerals in single vitamin and multi-vitamin form and in different potency levels. Our vitamin and mineral products
are available in liquid, tablets, soft gelatin, and hard-shell capsules and powder forms, and are available in traditional bottle packaging form or in
customized daily packet form ("Vitapak"). Many of our special vitamin and mineral formulations, such as Mega Men, Ultra Mega and
WELLbeING are available only at GNC locations and on www.gnc.com. In addition to our selection of VMHS products with unique formulations,
we also offer the full range of standard "alphabet" 6