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GNC HOLDINGS, INC.
10-K
Annual report pursuant to section 13 and 15(d)
Filed on 02/25/2011
Filed Period 12/31/2010

Table of contents

  • Page 1
    GNC HOLDINGS, INC. 10-K Annual report pursuant to section 13 and 15(d) Filed on 02/25/2011 Filed Period 12/31/2010

  • Page 2
    ...file number: 333-114396 General Nutrition Centers, Inc. (Exact name of registrant as specified in its charter) DELAWARE (state or other jurisdiction of Incorporation or organization) 72-1575168 (I.R.S. Employer Identification No.) 300 Sixth Avenue 15222 Pittsburgh, Pennsylvania (Zip Code) (Address...

  • Page 3
    ... check if a smaller reporting company) Smaller reporting company o No ý Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o As of February 25, 2011, all of the registrant's common equity was privately held, and there was no public market...

  • Page 4
    ... Corporate Governance Item 11 Item 12 Item 13 Item 14 Part IV Item 15 Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions and Director Independence Principal Accountant Fees and Services...

  • Page 5
    ... within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business. Forward-looking statements include statements that may relate to our plans, objectives, goals, strategies, future events, future revenues or...

  • Page 6
    ...VMHS") products, sports nutrition products, and diet products. Our diversified, multi-channel business model derives revenue from product sales through domestic company-owned retail stores, domestic and international franchise activities, third-party contract manufacturing, e-commerce and corporate...

  • Page 7
    ...to-market opportunities. In addition, our in-house product development capabilities enable us to offer our customers proprietary merchandise that can only be purchased through our locations or on our website. Since the nutritional supplement consumer often requires knowledgeable customer service, we...

  • Page 8
    ...Based on our Gold Card Program data, customers age 19 to 29 years old represented approximately 26% of our sales in 2010, which is an increase of 8% from 2006. In addition, the average age of the U.S. population is increasing and data from the United States Census Bureau indicates that the number of...

  • Page 9
    ...level marketing organizations, online retailers, mail-order companies and a variety of other smaller participants. The nutritional supplements sold through these channels are divided into four major product categories: VMHS; sports nutrition products; diet products; and other wellness products. Most...

  • Page 10
    ... with Rite Aid to open our GNC franchise store-within-a-store locations. Through this strategic alliance, we generate revenues from fees paid by Rite Aid for new store-within-a-store openings, sales to Rite Aid of our products at wholesale prices, the manufacturing of Rite Aid private label products...

  • Page 11
    ... market our proprietary brands of nutritional products through an integrated marketing program that includes internet, print, and radio media, storefront graphics, direct mailings to members of our Gold Card loyalty program, and point of purchase promotional materials. Manufacturing and Distribution...

  • Page 12
    ... offerings include products designed to provide nutritional support to specific areas of the body, such as joints, the heart and blood vessels, and the digestive system. Overall, GNC-branded proprietary products constituted 81% of our VMHS sales in 2010. Sports Nutrition Products Sports nutrition...

  • Page 13
    ... weight management approaches, and products designed to increase thermogenesis (a change in the body's metabolic rate measured in terms of calories) and metabolism. The diet category is cyclical with new products generating short-term sales growth before generally declining over time, making sales...

  • Page 14
    ... revenues primarily from sales of products to customers at our company-owned stores in the United States and Canada, and in the United States through our website, GNC.com. Locations As of December 31, 2010, we operated 2,917 company-owned stores across all 50 states and in Canada, Puerto Rico...

  • Page 15
    ...in the United States accounted for approximately 63% of our total franchise revenues for the year ended December 31, 2010. In 2010, new franchisees in the United States were required to pay an initial fee of $40,000 for a franchise license. Existing GNC franchise operators may purchase an additional...

  • Page 16
    ...437 international locations (including distribution centers where retail sales are made) as of December 31, 2010. We typically generate less revenue from franchises outside the United States due to lower international royalty rates and the franchisees purchasing a smaller percentage of products from...

  • Page 17
    ... goods and third-party products to our distribution centers. Wholesale Franchise Store-Within-a-Store Locations. To increase brand awareness and promote access to customers who may not frequent specialty nutrition stores, we entered into a strategic alliance with Rite Aid to open GNC franchise store...

  • Page 18
    ..., mail-order companies, other internet sites and a variety of other smaller participants. We believe that the market is highly sensitive to the introduction of new products. In the United States, many of our competitors have national brands that are heavily advertised and are manufactured by large...

  • Page 19
    ... our products are sold. The Dietary Supplement Health and Education Act of 1994 ("DSHEA") established a new framework governing the composition, safety, labeling, manufacturing and marketing of dietary supplements. Generally, under DSHEA, dietary ingredients that were marketed in the United States...

  • Page 20
    ...action as an illegal drug. In June 2007, pursuant to the authority granted to the FDA by DSHEA, the FDA published detailed Current Good Manufacturing Practice ("GMP") regulations that govern the manufacturing, packaging, labeling and holding operations of dietary supplement manufacturers. The GMP 18

  • Page 21
    ...provisions of federal law applicable to dietary supplements, including powers to issue a public warning or notice of violation letter to a company, publicize information about illegal products, detain products intended for import, request a recall of illegal products from the market, and request the...

  • Page 22
    ... products do not flow through our distribution centers. Although franchise contracts contain strict requirements for store operations, including compliance with federal, state and local laws and regulations, we cannot exercise the same degree of control over franchisees as we do over our company...

  • Page 23
    ... without good cause; interfere with the right of free association among franchisees; disapprove the transfer of a franchise; discriminate among franchisees with regard to franchise terms and charges, royalties, and other fees; and place new stores near existing franchises. To date, these laws have...

  • Page 24
    ... our costs associated with this growth, our operating margins and profitability will be adversely affected. We operate in a highly competitive industry. Our failure to compete effectively could adversely affect our market share, revenues, and growth prospects. The U.S. nutritional supplements retail...

  • Page 25
    ...-party nutritional supplements. We may not be able to compete effectively and our attempt to do so may require us to reduce our prices, which may result in lower margins. Failure to effectively compete could adversely affect our market share, revenues and growth prospects. Unfavorable publicity or...

  • Page 26
    ... to general adverse economic and industry conditions; require us to use all or a large portion of our cash flow from operations to pay principal and interest on our debt, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, and other business activities...

  • Page 27
    ... to continue our current rate of growth and store expansion, which may have an adverse effect on our revenues and results of operations. On February 7, 2011, we announced that we intend to enter into, subject to market and other conditions, the Refinancing. We currently expect to use the proceeds...

  • Page 28
    ... Senior Credit Facility and the indentures governing the Senior Notes and the Senior Subordinated Notes may be affected by changes in our operating and financial performance, changes in general business and economic conditions, adverse regulatory developments or other events beyond our control. The...

  • Page 29
    ...or statement of nutritional value that we use to support the marketing of a dietary supplement is an impermissible drug claim, is not substantiated, or is an unauthorized version of a "health claim". See "Business - Government Regulation - Product Regulation" for additional information. Any of these...

  • Page 30
    ... material adverse effect on our financial condition or results of operations. We may incur material product liability claims, which could increase our costs and adversely affect our reputation, revenues, and operating income. As a retailer, distributor and manufacturer of products designed for human...

  • Page 31
    ...any of the products we formulate, manufacture or sell would require significant management attention, would likely result in substantial and unexpected expenditures and could materially and adversely affect our business, financial condition or results of operations. Furthermore, a recall, withdrawal...

  • Page 32
    ... our sales and customer relationships. Our manufacturing operations produced approximately 35% of the products we sold for each of the years ended December 31, 2010 and 2009. Other than powders and liquids, nearly all of our proprietary products are produced in our manufacturing facility located in...

  • Page 33
    ..., selling or using some aspect of our products, which could adversely affect our revenues and market share. We have invested significant resources to promote our GNC brand name in order to obtain the public recognition that we have today. Because of the differences in foreign trademark laws...

  • Page 34
    ... franchise revenues. Our franchise activities are subject to federal, state and international laws regulating the offer and sale of franchises and the governance of our franchise relationships. These laws impose registration, extensive disclosure requirements and bonding requirements on the offer...

  • Page 35
    ... effective management of inventory to meet the needs of new and existing stores on a timely basis; general economic conditions; and the availability of sufficient funds for expansion. Many of these factors are beyond our control. In addition, the costs associated with opening and operating our new...

  • Page 36
    ... results and financial condition. Economic, political and other risks associated with our international operations could adversely affect our revenues and international growth prospects. As of December 31, 2010, we had 169 company-owned Canadian stores and 1,437 international franchise stores in 46...

  • Page 37
    ... of our website or our customer processing, distribution, or communications systems, for any reason, could seriously harm our business, financial condition, and operating results. The occurrence of any of these factors could have a material adverse effect on our business, financial condition or...

  • Page 38
    ... and employment levels; the housing market; consumer debt levels; availability of consumer credit; credit and interest rates; fuel and energy costs; energy shortages; taxes; general political conditions, both domestic and abroad; and the level of customer traffic within department stores, malls and...

  • Page 39
    ...or other energy) prices or a fuel shortage, delays in opening new stores, the temporary lack of an adequate work force in a market, the temporary or long-term disruption in the supply of products from some local and overseas suppliers, the temporary disruption in the transport of goods from overseas...

  • Page 40
    ... As of December 31, 2010, our company-owned and franchise stores in the United States and Canada (excluding store-within-a-store locations) and our other international franchise stores consisted of: United States and Canada Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware...

  • Page 41
    ... on our financial condition and operating results. As a manufacturer and retailer of nutritional supplements and other consumer products that are ingested by consumers or applied to their bodies, we have been and are currently subjected to various product liability claims. Although the effects of...

  • Page 42
    ..., Northern District of California, 09CV3861 (filed August 21, 2009); Jessica Rogoff v. General Nutrition Centers, Inc., et al., Superior Court of the State of California, County of Los Angeles, BC422842 (filed September 29, 2009); Lucretia Ballou v. Muscletech Research and Development, Inc., et al...

  • Page 43
    ...et al. v. General Nutrition Centers, Inc., et al., Superior Court of California, County of San Francisco, CGC 10-497919 (filed March 19, 2010); Phillip Sims v. GNC Corporation, et al., U.S. District Court, District of New Jersey, 10CV1728 (filed April 5, 2010); Donna Natali v. GNC Corporation, et al...

  • Page 44
    ... By court order dated October 6, 2009, the United States Judicial Panel on Multidistrict Litigation consolidated pretrial proceedings of many of the pending actions (including the above-listed GNC class actions) in the Southern District of California (In re: Hydroxycut Marketing and Sales Practices...

  • Page 45
    ... board of directors. We are subject to certain restrictions on our ability to pay dividends under the terms of the Senior Credit Facility, Senior Notes and Senior Subordinated Notes. Securities Authorized for Issuance under Equity Compensation Plans Upon completion of the Merger, our Parent adopted...

  • Page 46
    ... of Contents On September 1, 2009, David Berg joined the Company as its Executive Vice President of Global Business Development and Chief Operating Officer, International. In connection with his employment, our Parent's compensation committee granted Mr. Berg certain options (the "Preferred Stock...

  • Page 47
    ... 31, 2006 Statement of Operations Data: Revenue Retail Franchising Manufacturing/ Wholesale Total revenue Cost of sales, including costs of warehousing distribution and occupancy Gross profit Compensation and related benefits Advertising and promotion Other selling, general and administrative Other...

  • Page 48
    ... Net cash provided by (used in) operating activities Net cash used in investing activities Net cash (used in) provided by financing activities Other Data: Capital expenditures(3) Number of stores (at end of period) Company-owned stores(4) Franchised stores(4) Franchised storewithin-a-store locations...

  • Page 49
    ... subsequently converted into company-owned stores. Includes corporate store locations acquired by franchisees. Includes franchise stores closed and acquired by us. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion...

  • Page 50
    ..., sports nutrition products, diet products, and other wellness products. We derive our revenues principally from product sales through our company-owned stores and online through GNC.com, franchise activities, and sales of products manufactured in our facilities to third parties. We sell products...

  • Page 51
    ....com, and the sale of our proprietary products to and through PetSmart. License fee revenue from the opening of GNC franchise store-within-a-store locations within Rite Aid stores is also recorded in this segment. Our revenues generated by our manufacturing and wholesale operations are subject to...

  • Page 52
    .... Operating income growth resulted from higher sales and margins in our retail and franchise segments and effective cost controls on unallocated expenses. Net income growth resulted primarily from higher operating income, lower interest expense, and a lower effective tax rate. Recent revenue growth...

  • Page 53
    ...probiotics products manufactured by Lifelong Nutrition, Inc. ("Lifelong") for resale under our proprietary brand name GNC WELLbeING®. Carmen Fortino, who serves as one of our directors, was the Managing Director, a member of the board of directors and a stockholder of Lifelong's parent company. The...

  • Page 54
    ...to which General Nutrition Corporation and Lifelong will develop a branded line of supplements to be manufactured by Lifelong. As described above, Mr. Fortino was the Managing Director, a member of the board of directors and a stockholder of Lifelong's parent company. Products manufactured under the...

  • Page 55
    ... Manufacturing/Wholesale Intersegment elimination(1) Total revenues Operating expenses: Cost of sales, including warehousing, distribution and occupancy costs Compensation and related benefits Advertising and promotion Other selling, general and administrative expenses Strategic alternative costs...

  • Page 56
    ... costs as a result of operating 85 more stores at December 31, 2010 than 2009, and higher fulfillment costs related to increased web sales. Selling, General and Administrative ("SG&A") Expenses Our consolidated SG&A expenses, including compensation and related benefits, advertising and promotion...

  • Page 57
    ... in royalty income, franchise fees, higher dollar margins on increased product sales to franchisees and reductions in bad debt expenses and amortization expense. Manufacturing/Wholesale. Operating income decreased $4.1 million, or 5.5%, to $69.4 million for the year ended December 31, 2010 compared...

  • Page 58
    ... from our non-same store sales. The same store sales increase includes GNC.com revenue, which increased $10.8 million, or 29.9%, to $46.8 million, compared to $36.0 million in 2008. Sales increases occurred in the major product categories of VMHS and sports nutrition. Sales in the diet category were...

  • Page 59
    ... fee revenue of $3.2 million as a result of Rite Aid opening 197 fewer franchise store-within-a-stores in 2009 compared to 2008. In addition, sales to www.drugstore.com increased by $1.3 million in 2009 compared to 2008. Cost of Sales Consolidated cost of sales, which includes product costs, costs...

  • Page 60
    ... sales volumes and reduced advertising spending, partially offset by increases in occupancy costs, compensation costs and other SG&A expenses. Franchise. Operating income was unchanged at $80.8 million for each of the years ended December 31, 2009 and 2008. Manufacturing/Wholesale. Operating...

  • Page 61
    ...Revolving Credit Facility, after giving effect to $8.8 million utilized to secure letters of credit and a $6.3 million commitment Lehman that we do not expect Lehman will fund. We expect that our primary uses of cash in the near future will be for the purposes of fulfilling debt service requirements...

  • Page 62
    ... depend on our future operating performance, which will be affected by general economic, financial and other factors beyond our control. We are currently in compliance with our debt covenant reporting and compliance obligations under the Revolving Credit Facility. On February 7, 2011, we announced...

  • Page 63
    ...funding our 2011 capital requirements with cash flows from operations and, if necessary, borrowings under our Senior Credit Facility. Cash Used in Financing Activities We used cash of $1.7 million in 2010 for payments on long-term debt. A $28.4 million dividend was declared by our board of directors...

  • Page 64
    ... issue discount for U.S. federal income tax purposes. We may redeem some or all of the Senior Notes at any time, at specified redemption prices. If we experience certain kinds of changes in control, we must offer to purchase the Senior Notes at 101% of par plus accrued interest to the purchase date...

  • Page 65
    ... account any unscheduled payments that may occur due to our future cash positions. The interest that will accrue on the long-term obligations includes variable rate payments, which are estimated using the associated LIBOR index as of December 31, 2010. The Senior Credit Facility uses the three month...

  • Page 66
    ... aggregate costs associated with our company-owned retail store operating leases. These balances consist of $10.6 million of advertising and $9.2 million related to a management services agreement. In connection with the Merger, we entered into a management services agreement with Holdings, pursuant...

  • Page 67
    ... the original estimates, requiring adjustments to these balances in future periods. Revenue Recognition We operate primarily as a retailer, through company-owned stores, franchise stores, and to a lesser extent, as a wholesaler. In addition, we offer products domestically through GNC.com. We apply...

  • Page 68
    ... store opens or at the time of franchise renewal or transfer, as applicable. Inventories Where necessary, we adjust the carrying value of our inventory to the lower of cost or net realizable value. These estimates require us to make approximations about the future demand for our products in order...

  • Page 69
    ... analysis. Our associated liability for this self-insurance was not significant as of December 31, 2010 and 2009. Prior to 2003, General Nutrition Companies, Inc. was included as an insured under several of its then ultimate parent's global insurance policies. We carry product liability insurance...

  • Page 70
    ...under "Risk Factors", could have a negative effect on our business and operating results which could affect the valuation of our intangibles. Leases We have various operating leases for company owned and franchise store locations and equipment. Store leases generally include amounts relating to base...

  • Page 71
    ... foreign exchange rates and commodity prices. Changes in these factors could cause fluctuations in the results of our operations and cash flows. In the ordinary course of business, we are primarily exposed to foreign currency and interest rate risks. We do not use derivative financial instruments in...

  • Page 72
    ... from local currencies to the U.S. dollar of the reported financial position and operating results of our non-U.S. based subsidiaries. We are also subject to foreign currency exchange rate changes for purchases of goods and services that are denominated in currencies other than the U.S. dollar...

  • Page 73
    ... OF CONTENTS Page Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets As of December 31, 2010 and 2009 Consolidated Statements of Operations For the years ended December 31, 2010, 2009 and 2008 Consolidated Statements of Stockholders Equity and Comprehensive Income...

  • Page 74
    ... of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was...

  • Page 75
    ... fees, net (Note 2) Deferred tax assets, net (Note 5) Other long-term assets (Note 9) Total long-term assets Total assets Current liabilities: Accounts payable Accrued payroll and related liabilities (Note 10) Accrued interest (Note 12) Current portion, long-term debt (Note 12) Deferred revenue...

  • Page 76
    ... GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES Consolidated Statements of Operations (in thousands) Year ended December 31, Revenue Cost of sales, including costs of warehousing, distribution and occupancy Gross profit Compensation and related benefits Advertising and promotion Other selling...

  • Page 77
    ... income: Net income Unrealized loss on derivatives designated and qualified as cash flow hedges, net of tax of $4,829 Foreign currency translation adjustments Comprehensive income Return of capital to GNC Corporation Non-cash stockbased compensation Balance at December 31, 2008 Comprehensive income...

  • Page 78
    Return of capital to GNC Corporation Non-cash stockbased compensation Dividend payment Balance at December 31, 2009 Comprehensive income: Net income Unrealized gain on derivatives designated and qualified as cash flow hedges, net of tax of $2,625 Foreign currency translation adjustments ...

  • Page 79
    ... Company (Note 1) Franchise store conversions Acquisition of intangibles Store acquisition costs Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Return of capital to Parent company Dividend payment Borrowings (payments) from revolving credit facility Payments on long-term...

  • Page 80
    ... and Puerto Rico and in addition the Company offers products domestically through GNC.com and www.drugstore.com. Franchise stores are located in the United States and 46 international countries. The Company operates its primary manufacturing facilities in South Carolina and distribution centers in...

  • Page 81
    ...market on a first in/first out basis ("FIFO"). Cost is determined using a standard costing system which approximates actual costs. The Company regularly reviews its inventory levels in order to identify slow moving and short dated products, expected length of time for product sell through and future...

  • Page 82
    ...provisions of applicable tax law. Expenditures that materially increase the value or clearly extend the useful life of property, plant and equipment are capitalized in accordance with the policies outlined above. Repair and maintenance costs incurred in the normal operations of business are expensed...

  • Page 83
    ... company-owned stores, franchise stores and sales through its website, GNC.com and to a lesser extent through wholesale operations. The Retail segment recognizes revenue at the moment a sale to a customer is recorded. These revenues are recorded via the Company's point of sale system. Gross revenues...

  • Page 84
    ... OF SIGNIFICANT ACCOUNTING POLICIES (Continued) at wholesale prices. Revenue on product sales to franchisees is recognized when risk of loss, title and insurable risks have transferred to the franchisee. Franchise fees are recognized by the Company at the time of a franchise store opening. Interest...

  • Page 85
    ... December 31, 2010, 2009 and 2008, respectively, net of approximately $11.0 million annually from the national advertising fund. Leases. The Company has various operating leases for company-owned and franchise store locations and equipment. Store leases generally include amounts relating to base...

  • Page 86
    ... using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. See Note 5, "Income Taxes". For the year ended December 31, 2010, the Company will file a consolidated federal income tax return. For state income tax purposes, the Company...

  • Page 87
    ... and holds no derivative instruments for trading purposes. The Company uses derivative financial instruments to reduce its exposure to market risk for changes in interest rates primarily in respect of its long term debt obligations. The Company tries to manage its interest rate risk in order to...

  • Page 88
    ... OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The Company has interest rate swap agreements outstanding that effectively converted notional amounts of an aggregate $550.0 million of debt from floating to fixed interest rates. The four outstanding agreements mature between April 2011 and September...

  • Page 89
    ... that were previously designated as qualified special-purpose entities. The amendments were effective as of January 1, 2010. The adoption of ASU No. 2009-17 did not have a material impact on the Company's consolidated financial position, results of operations, and cash flows. NOTE 3. RECEIVABLES...

  • Page 90
    ..., 2009 2010 (in thousands) Finished product ready for sale Work-in-process, bulk product and raw materials Packaging supplies NOTE 5. INCOME TAXES Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting...

  • Page 91

  • Page 92
    ...assets related to state net operating losses. The effect of this tax benefit is included in the income tax reconciliation table under the caption "state income taxes, net of federal tax benefit". The Company does not have any undistributed earnings of international subsidiaries, at December 31, 2010...

  • Page 93
    ... the next 12 months. The Company files a consolidated federal tax return and various consolidated and separate tax returns as prescribed by the tax laws of the state and local jurisdictions in which it and its subsidiaries operate. The Company has been audited by the Internal Revenue Service, ("IRS...

  • Page 94
    ... as the related interest, in light of changing facts and circumstances. Settlement of any particular position could require the use of cash. Favorable resolution would be recognized as a reduction to its effective income tax rate in the period of resolution. NOTE 6. PREPAIDS AND OTHER CURRENT ASSETS...

  • Page 95
    ... international, to operate stores for a contractual period. Final fair values were assigned to the Company's manufacturing and wholesale segments for production and continued sales to certain customers. For the years ended December 31, 2010 and 2009, the Company acquired 24 and 53 franchise stores...

  • Page 96
    ... Estimated Life in years Brands - retail Brands - franchise Gold card - retail Gold card - franchise Retail agreements Franchise agreements Manufacturing agreements Other intangibles Franchise rights Cost December 31, 2010 Accumulated Carrying Amortization Amount Cost (in thousands) $ - $ 500,000...

  • Page 97
    ... in a partnership that owns and manages the building that houses the Company's corporate headquarters. The Company occupies the majority of the available lease space of the building. The general partner is responsible for the operation and management of the property and reports the results of the...

  • Page 98
    ... tax Fair value of interest rate swap agreements Other current liabilities Total Deferred revenue consists primarily of Gold Card and gift card deferrals. NOTE 12. LONG-TERM DEBT / INTEREST In conjunction with the Merger, the Company repaid certain of its existing debt and issued new debt. The new...

  • Page 99
    ...,619 297,959 110,000 7,184 47 (1,724) 1,058,085 $ At December 31, 2010, the Company's total debt principal maturities are as follows: Years Ending December 31, 2011 2012 2013 2014 2015 Senior Credit Facility $ Senior Notes(a) Senior Subordinated Notes (in thousands) $ - - - - 110,000 110,000...

  • Page 100
    ...agreement) for each fiscal year must be used to pay down outstanding borrowings. GNC Corporation, the Company's direct parent company ("GNC Corporation"), and the Company's existing and future direct and indirect domestic subsidiaries have guaranteed the Company's obligations under the Senior Credit...

  • Page 101
    ...the aggregate available amount of the Revolving Credit Facility at a per annum rate equal to 0.5%. The Company pays interest on outstanding borrowings on the Revolving Credit Facility at a Eurodollar rate or ABR plus the applicable margin in effect. As of December 31, 2010 and 2009, the ABR was 4.00...

  • Page 102
    ... of the Company's subsidiaries' ability to declare or pay dividends to its stockholders. In accordance with the terms of the Senior Notes purchase agreement and the offering memorandum, these notes were required to be exchanged for publicly registered exchange notes within 210 days after the sale of...

  • Page 103
    ... to fund its operations through internally generated cash and, if necessary, from borrowings under the amount remaining available under the Revolving Credit Facility. The Company expects its primary uses of cash in the near future will be debt service requirements, capital expenditures and working...

  • Page 104
    ...in the future to, convert any such franchise store into a corporate store and fulfill the remaining lease obligation. The composition of the Company's rental expense for all periods presented included the following components: December 31, 2010 Retail stores: Rent on long-term operating leases, net...

  • Page 105
    ... of Contents NOTE 15. LONG-TERM LEASE OBLIGATIONS (Continued) Minimum future obligations for non-cancelable operating leases with initial or remaining terms of at least one year in effect at December 31, 2010 are as follows: Company Retail Stores 2011 2012 2013 2014 2015 Thereafter $ 106,103 83,492...

  • Page 106
    ... General Nutrition Corporation be dismissed without prejudice. Any liabilities that may arise from this matter are not probable or reasonably estimable at this time. Pro-Hormone/Androstenedione Cases. The Company is currently defending six lawsuits (the "Andro Actions") relating to the sale by GNC...

  • Page 107
    ... a management services agreement with Parent. Other commitments related to the Company's business operations cover varying periods of time and are not significant. All of these commitments are expected to be fulfilled with no adverse consequences to the Company's operations of financial condition...

  • Page 108
    ...safety laws and regulations and that any liabilities for noncompliance will not have a material adverse effect on its business or financial performance. However, it is difficult to predict future liabilities and obligations, which could be material. NOTE 17. STOCKHOLDER'S EQUITY At December 31, 2010...

  • Page 109
    ...31, 2010, the net unrecognized compensation cost was $6.1 million and is expected to be recognized over a weighted average period of approximately 1.4 years. In 2007, the board of directors of Parent (the "Parent Board") and Parent's stockholders approved and adopted the GNC Acquisition Holdings Inc...

  • Page 110
    ... stock is not publicly traded on an open market, the Company utilized its current peer group average to estimate the expected volatility. The assumptions used in the Company's Black Scholes valuation related to stock option grants made during the years ended December 31, 2010, 2009 and 2008...

  • Page 111
    ...the Company's corporate store operations in the United States, Canada and its GNC.com business. The Franchise reportable segment represents the Company's franchise operations, both domestically and internationally. The Manufacturing/Wholesale reportable segment represents the Company's manufacturing...

  • Page 112
    ...(Continued) Operating income: Retail Franchise Manufacturing/Wholesale Unallocated corporate and other costs: Warehousing and distribution costs Corporate costs Sub total unallocated corporate and other costs Total operating income Interest expense, net Income before income taxes Income tax expense...

  • Page 113
    ...: Retail Franchise Manufacturing / Wholesale Corporate / Other Total capital expenditures Total assets Retail Franchise Manufacturing / Wholesale Corporate / Other Total assets Geographic areas Total revenues: United States Foreign Total revenues Long-lived assets: United States Foreign Total...

  • Page 114
    ...the Company's 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 the Company expects to record similar adjustments in the future. In addition to the Retail product categories discussed above, Franchise...

  • Page 115
    ... million, and $3.3 million for the years ended December 31, 2010, 2009 and 2008, respectively. The following is a summary of the Company's franchise revenue by type: December 31, 2010 Product sales Royalties Franchise fees Other Total franchise revenue $ 242,160 38,722 5,646 7,249 293,777 Years...

  • Page 116
    ...The plan is funded entirely by elective contributions made by the participants. The Company has elected to finance any potential plan benefit obligations using corporate owned life insurance policies. All assets relating to the non-qualified deferred compensation plan are held in a rabbi trust. NOTE...

  • Page 117
    ... deferred compensation plan. The liabilities related to these plans are adjusted based on changes in the fair value of the underlying employee-directed investment choices. Since the employee-directed investment choices are exchange traded equity indexes with quoted prices in active markets, the...

  • Page 118
    ...to which General Nutrition Corporation and Lifelong will develop a branded line of supplements to be manufactured by Lifelong. As described above, Mr. Fortino was the Managing Director, a member of the board of directors and a stockholder of Lifelong's parent company. Products manufactured under the...

  • Page 119
    ... NOTE 25. SUPPLEMENTAL GUARANTOR INFORMATION (Continued) Supplemental Condensed Consolidating Balance Sheets December 31, 2010 Parent/ Issuer Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries (in thousands) Eliminations Consolidated Current assets Cash and cash equivalents...

  • Page 120
    ... Brands Property, plant and equipment, net Investment in subsidiaries Other assets Total assets Current liabilities Current liabilities Intercompany payables Total current liabilities Long-term debt Deferred tax liabilities Other long-term liabilities Total liabilities Total stockholder's equity...

  • Page 121
    ...of sales, including costs of warehousing, distribution and occupancy Gross profit Compensation and related benefits Advertising and promotion Other selling, general and administrative Subsidiary (income) expense Other (income) expense Operating income Interest expense, net Income before income taxes...

  • Page 122
    ... Eliminations Consolidated Revenue Cost of sales, including costs of warehousing, distribution and occupancy Gross profit Compensation and related benefits Advertising and promotion Other selling, general and administrative Subsidiary (income) expense Other (income) expense Operating income (loss...

  • Page 123
    ...the Company Other investing Net cash provided by (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES: GNC Corporation investment in General Nutrition Centers, Inc Dividend payment Financing fees Other financing Net cash used in financing activities Effect of exchange rate on cash Net...

  • Page 124
    Table of Contents NOTE 26. SUBSEQUENT EVENTS On February 7, 2011, the Company announced that it intends to enter into, subject to market and other conditions, a financing transaction with certain lenders. The Company currently expect s to use the proceeds from the transaction, if consummated, to, ...

  • Page 125
    ... required to be disclosed in the reports that we file or submit under the Exchange Act has been appropriately recorded, processed, summarized and reported on a timely basis and are effective in ensuring that such information is accumulated and communicated to our management, including our CEO...

  • Page 126
    ... 24, 2011. Age Position Name Joseph Fortunato 57 Director and Chief Executive Officer Beth J. Kaplan 52 Director, President and Chief Merchandising and Marketing Officer Michael M. Nuzzo 40 Executive Vice President, Chief Financial Officer David P. Berg 49 Executive Vice President, Chief Operating...

  • Page 127
    ... and related services. Mr. Berg served as: Executive Vice President and Chief Operating Officer, Best Buy International from July 2008 to March 2009 and was responsible for the company's international operations; Executive Vice President, International Strategy and Corporate Development from...

  • Page 128
    ... Manager of Retail Operations of General Nutrition Corporation since December 2005 and as Senior Vice President of Stores since March 2003. From March 2001 until March 2003, Mr. Dowd was President of Healthlabs, LLC, an unaffiliated contract supplement manufacturing and product consulting company...

  • Page 129
    ...the Board of Yankee Candle, Inc. from 2003 to 2007, when the company went private. Mr. Hines's experience as a financial executive and certified public accountant, coupled with his extensive knowledge of financial reporting rules and regulations, evaluating financial results and generally overseeing...

  • Page 130
    ...marketing, sales, manufacturing and general management). Mr. Wallace is also a director of Clinical Data, Inc. and ImmunoGen, Inc. Mr. Wallace's years of experience at several large pharmaceutical and consumer products companies and his significant corporate governance experience through his service...

  • Page 131
    ... the independent public accounting firm, reviews and discusses the audited financial statements with the independent auditors and management and will recommend to our board of directors whether the audited financials should be included in our Annual Reports on Form 10-K to be filed with the SEC. The...

  • Page 132
    ... process and compensation structure for our other executive officers; and the compensation structure and annual compensation for our board of directors and the Parent Board. In addition, the Compensation Committee has the authority to review our incentive compensation plans, recommend changes...

  • Page 133
    ... reviewed this report, which generally indicated that our top nine executives receive market compensation, the Compensation Committee did not rely on this report or use it for benchmarking purposes in determining the current or future compensation of our Named Executive Officers. Our Compensation...

  • Page 134
    ... paid is generally commensurate with the achievement or contribution being recognized. See "- Employment Agreements with our Named Executive Officers" and "- Potential Termination or Change-in-Control Payments" for a discussion of the severance payments and benefits our Named Executive Officers may...

  • Page 135
    ... negative perception with our employees generally, stockholders or holders of our debt. Each Named Executive Officer's current and prior compensation is considered in setting future compensation. In addition, we review the compensation practices of other companies. Base salary amounts are determined...

  • Page 136
    ...executive positions, we break down the survey information based on corporate and/or average store revenue and geographic location of comparable companies to ensure that we are using valid comparisons. We also use internal value comparisons; however, we do not have any specific point system or rating...

  • Page 137
    ...the 2010 Incentive Plan. The annual incentive plan for 2011 performance (the "2011 Incentive Plan") was adopted by the Compensation Committee on February 3, 2011. The 2011 Incentive Plan provides for the same target and maximum bonus amounts for the Chief Executive Officer, President, Executive Vice...

  • Page 138
    ... are an important factor in aligning the long-term financial interests of our Named Executive Officers and stockholders. The Compensation Committee continually evaluates the use of equity-based awards and intends to continue to use such awards in the future as part of designing and administering our...

  • Page 139
    ... Officer generally has little or no record of service prior to receiving stock option grant awards, elements of individual performance are not taken into account when making such stock option grant awards. To the extent that the Compensation Committee or the Parent Board determines, at a future date...

  • Page 140
    ...and to receive benefits under, any benefit plans, arrangements, or policies available to employees generally or to our executive officers generally. The fringe benefits for our Chief Executive Officer and President were negotiated in connection with their respective employment agreements and in some...

  • Page 141
    ... the Compensation Committee may, in its discretion, revise, amend or add to Named Executive Officers' benefits if it deems it advisable, we have no current plans to change the levels of benefits currently provided to our Named Executive Officers. We annually review these fringe benefits and make...

  • Page 142
    ...Revenue Code generally disallows public companies a tax deduction for compensation in excess of $1,000,000 paid to their chief executive officers and the four other most highly compensated executive officers unless certain performance and other requirements are met. Our intent generally is to design...

  • Page 143
    ... 31, 2010, none of our executive officers served as a director or member of the compensation committee of another entity whose executive officers served on the Parent Board or the Compensation Committee. Compensation Committee Report The members of the Compensation Committee have reviewed and...

  • Page 144
    ... personnel initiatives. For 2010: (i) a discretionary bonus in respect of performance in 2010 paid to Mr. Fortunato as described in "- Chief Executive Officer Compensation"; and (ii) a signing bonus paid to Mr. Berg as described in "- Employment Agreements with our Named Executive Officers - Other...

  • Page 145
    2010 exceeded 103.7% of our EBITDA target, which resulted in our Named Executive Officers earning the maximum bonus under the 2010 Incentive Plan. See "- How We Chose Amounts and/or Formulas for Each Element" for information about such incentive plans. 138

  • Page 146
    ..., supplemental retirement, parking, professional assistance, car allowance, financial services assistance and the imputed value of life insurance premiums. With respect to our Chief Executive Officer, perquisites also include reimbursement of country club dues and expenses and payment of term life...

  • Page 147
    ... sets forth information concerning awards under our non-equity incentive plans granted to each of our Named Executive Officers during the fiscal year ended December 31, 2010. Assumptions used in the calculation of certain dollar amounts are included in Note 18, "Stock-Based Compensation Plans", to...

  • Page 148
    ... and unpaid dividends through the date of purchase on terms consistent with the 2007 Stock Plan, each of which vests upon the second anniversary of the commencement of his employment and is exercisable for a period of seven days thereafter. Mr. Berg is the only executive officer who has been granted...

  • Page 149
    ...an in-service account, which is payable (subject to certain special elections for 2006 and 2007 pursuant to Section 409A of the Internal Revenue Code of 1986, as amended (the "Code")) on a future date selected by the employee at the time the employee first elects to defer compensation under the plan...

  • Page 150
    ... salary based upon our attainment of annual goals established by the Parent Board or the Compensation Committee. The employment agreement also provides that the Parent Board or the Compensation Committee may, in its sole discretion, determine to pay Mr. Fortunato a discretionary bonus at any time...

  • Page 151
    ...initial public offering of our Parent's Class A common stock, the multiple of base salary and annualized perquisites and of average annual bonus will increase from two times to three times. A termination of Mr. Fortunato's employment will be deemed to have been in anticipation of a change in control...

  • Page 152
    ... of him from our board of directors or the Parent Board; a material reduction in his base salary; or a relocation of his principal place of business of more than 75 miles. For purposes of Mr. Fortunato's employment agreement, "change in control" generally means: • an acquisition representing 50...

  • Page 153
    ... control, or within six months prior to or at any time following the completion of an initial public offering of our Parent's Class A common stock, then Ms. Kaplan will receive payment of a lump sum amount equal to two times her base salary and the annualized value of her perquisites and the average...

  • Page 154
    ... the 2007 Stock Plan in connection with his promotion to Chief Operating Officer. The employment agreements also entitle the executives to annual performance bonuses payable if we exceed the annual goals determined by the Parent Board or the Compensation Committee, and to certain fringe benefits and...

  • Page 155
    ... in the executive's base salary; or with respect to Mr. Berg only, the executive no longer directly reports to the Chief Executive Officer. For purposes of the employment agreements, "change in control" generally means: • an acquisition representing 50% or more of either our Parent's common stock...

  • Page 156
    ...of seven days thereafter. General The employment agreements for our Named Executive Officers contain: • terms of confidentiality concerning trade secrets and confidential or proprietary information which may not be disclosed by the executive except as required by court order or applicable law; and...

  • Page 157
    ... change in control events are generally based on the formula set forth in the form employment agreements, the Compensation Committee does not generally consider the amounts when establishing the compensation of its Named Executive Officers. The Compensation Committee, together with the Parent Board...

  • Page 158
    ... Prorated Annualized Incentive Compensation Health & Welfare Benefits Accelerated Vesting of Stock Options Payment Reduction Net Value Termination w/o Cause or for Good Reason or Non-renewal of the Agreement ($) 1,074,000 Termination w/o Cause or for Good Reason after a Change in Control (2-yr...

  • Page 159
    ...tax basis, receive less compensation than if the payment were not so reduced. Based on a hypothetical change in control on December 31, 2010, none of our Named Executive Officers would have been subject to a reduction payment if their employment had been terminated at the time of a December 31, 2010...

  • Page 160
    ... five anniversaries of the date of grant, and have a term of five years, subject to such non-employee director's continued service as a director until the applicable vesting date. Any director or chairman who is employed by Ares Management, OTPP and other purchasers in connection with the Merger...

  • Page 161
    ... to Mr. Wallace's continued service as a director until the applicable vesting date. None of our other directors was granted any stock options for the year ended December 31, 2010. The following table presents information regarding the compensation of our non-employee directors as of December 31...

  • Page 162
    ...'s service as a director for our first fiscal quarter of 2011. (5) (6) Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth, as of February 24, 2011 (the "Ownership Date"), the number of shares of our Parent's common...

  • Page 163
    ... and each current executive officer is c/o General Nutrition Centers, Inc., 300 Sixth Avenue, Pittsburgh, Pennsylvania 15222. Through a voting agreement within the Amended and Restated Stockholders Agreement, each of Ares and OTPP (together, the "Sponsors") has the right to designate four members of...

  • Page 164
    ... Kaplan is a Senior Partner in the Private Equity Group of Ares Management and member of Ares Partners Management Company LLC ("Ares Partners"), both of which indirectly control Ares. Mr. Kaplan expressly disclaims beneficial ownership of the shares owned by Ares. The address of Mr. Klos is c/o Ares...

  • Page 165
    ... of the Partners Group Entities and the partners, members and managers of the Partners Group Entities expressly disclaims beneficial ownership of the shares directly held by Direct Investments, Global Opportunities and Princess Private Equity. The address for Partners Group AG is Zugerstrasse 57, CH...

  • Page 166
    ...our Parent's then-current chief executive officer to the Parent Board. Under the terms of the Amended and Restated Stockholders Agreement, certain significant corporate actions require the approval of a majority of directors on the board of directors, including a majority of the directors designated...

  • Page 167
    ...to which General Nutrition Corporation and Lifelong will develop a branded line of supplements to be manufactured by Lifelong. As described above, Mr. Fortino was the Managing Director, a member of the board of directors and a stockholder of Lifelong's parent company. Products manufactured under the...

  • Page 168
    ... 31, 2010 and 2009 relate to professional services rendered by PricewaterhouseCoopers for the integrated audit of our consolidated annual financial statements and our internal control over financial reporting. The Audit Fees for the years ended December 31, 2010 and 2009 also include the review of...

  • Page 169
    ... as part of this report: (1) Financial statements filed in Part II, Item 8 of this report: • • Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets As of December 31, 2010 and December 31, 2009 • Consolidated Statements of Operations For the years ended December...

  • Page 170
    ... and long-term franchise notes receivable. Deductions for the allowance for doubtful accounts represent: accounts receivable reserve adjustments, resulting from applying our standard policy; reductions to franchise receivable reserves for franchise take-backs and customer product returns; and the...

  • Page 171
    ... the Company's Annual Report on Form 10-K (File No. 333-144396), filed March 11, 2010.) Amended and Restated Stockholders Agreement, dated February 12, 2008, by and among GNC Acquisition Holdings Inc. ("Holdings"), Ares Corporate Opportunities Fund II, L.P., Ontario Teachers' Pension Plan Board and...

  • Page 172
    ... by and between General Nutrition Investment Company and Numico Research B.V. (Incorporated by reference to Exhibit 10.13 to the Company's Registration Statement on Form S-4 (File No. 333-114502), filed April 15, 2004.) GNC Live Well Later Non-Qualified Deferred Compensation Plan, effective February...

  • Page 173
    ... to Exhibit 10.19.2 to the Company's Annual Report on Form 10-K (File No. 333-144396), filed March 11, 2010.) Employment Agreement, dated as of June 1, 2009, by and between the Company and David Berg. (Incorporated by reference to Exhibit 10.20 to Holdings' Pre-Effective Amendment No. 1 to its...

  • Page 174
    ... 10.21 to Holdings' Pre-Effective Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-169618), filed January 18, 2011.) GNC/Rite Aid Retail Agreement, dated as of December 8, 1998, by and between General Nutrition Sales Corporation and Rite Aid Corporation. (Incorporated by...

  • Page 175
    ... Aid Retail Agreement, dated as of July 31, 2007, by and between Nutra Sales Corporation (f/k/a General Nutrition Sales Corporation) and Rite Aid Hdqtrs. Corp. (Incorporated by reference to Exhibit 10.34 to the Company's Pre-Effective Amendment No. 1 to its Registration Statement on Form S-4 (File...

  • Page 176
    ... the undersigned, thereunto duly authorized. GENERAL NUTRITION CENTERS, INC. By: /s/ JOSEPH FORTUNATO Joseph Fortunato Chief Executive Officer Dated: February 25, 2011 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on...

  • Page 177
    ... KAPLAN Beth J. Kaplan Director Dated: February 25, 2011 By: /s/ DAVID B. KAPLAN David B. Kaplan Director Dated: February 25, 2011 By: /s/ BRIAN KLOS Brian Klos Director Dated: February 25, 2011 By: /s/ ROMEO LEEMRIJSE Romeo Leemrijse Director Dated: February 25, 2011 By: /s/ RICHARD WALLACE...

  • Page 178

  • Page 179
    Exhibit 10.32 General Nutrition Centers, Inc. DEFERRED COMPENSATION PLAN

  • Page 180
    ...COMPENSATION PLAN FOR General Nutrition Centers, Inc. General Nutrition Centers, Inc., a Delaware corporation (the "Company"), hereby establishes this Deferred Compensation Plan (the "Plan"), effective 1/1/09 (the "Effective Date"), for the purpose of attracting high quality executives and promoting...

  • Page 181
    ... benefits in order to determine that the Participant is disabled under this Plan. 1.17 "Distributable Amount" shall mean the vested balance in the applicable Account as determined under Article 4. 1.18 "Eligible Executive" shall mean a highly compensated or management level employee of the Company...

  • Page 182
    ... deferrals of his/her Compensation, (2) the investment Funds which shall act as the basis for crediting of interest on Account balances, and (3) the form and timing of distributions from Accounts. The Participant Election Forms may take the form of an electronic communication followed by appropriate...

  • Page 183
    ... thereof, in which case the successor or purchaser will be substituted for General Nutrition Centers, Inc. under the Plan. 1.32 "Termination of Service" shall mean the date of the cessation of the Participant's provision of services to the Company as defined under Code Section 409A for any...

  • Page 184
    ... to defer Compensation attributable to services provided after the time an election is made and in accordance with Section 409A. Elections shall take the form of a whole percentage (less applicable payroll withholding requirements for Social Security and income taxes and employee benefit plans as...

  • Page 185
    .... A new distribution election may be made at the time of subsequent deferral elections with respect to deferrals in Plan Years beginning after the Initial Election Period. However, a distribution election with respect to previously deferred amounts may only be changed under the terms and conditions...

  • Page 186
    ...day plus contributions credited that day to the investment fund subaccount by the Interest Rate for the corresponding Fund as determined by the Company pursuant to Section 3.2(b); and (c) In the event that a Participant elects for a given Plan Year's deferral of Compensation a Scheduled Distribution...

  • Page 187
    ... as of the prior day plus contributions credited that day to the investment fund subaccount by the Interest Rate for the corresponding Fund as determined by the Company pursuant to Section 3.2(b). 4.3 Trust. The Company shall be responsible for the payment of all benefits under the Plan. At its...

  • Page 188
    ... day of the Plan Year in which the deferrals are credited to the Participant's Account. The Participant may elect to receive the Scheduled Distribution in a single lump sum or substantially equal annual installments over a period of up to five (5) years. A Participant may delay and change the form...

  • Page 189
    ... lifetime on a form prescribed by the Committee. (b) Revision of Designation. The submission of a new Beneficiary designation shall cancel all prior Beneficiary designations. Any finalized divorce or marriage (other than a common law marriage) of a Participant subsequent to the date of a Beneficiary...

  • Page 190
    ..., divorce, or otherwise without execution of a new designation, or if every person designated as Beneficiary predeceases the Participant or dies prior to complete distribution of the Participant's benefits, then the Committee shall direct the distribution of such benefits to the Participant's estate...

  • Page 191
    ... documents. The Committee shall issue a decision not later than sixty (60) days after receipt of a request for review from a claimant unless special circumstances, such as the need to hold a hearing, require a longer period of time, in which case a decision shall be rendered as soon as possible but...

  • Page 192
    ... appropriate arrangements with the Company for satisfaction of any federal, state or local income tax withholding requirements, Social Security and other employee tax or other requirements applicable to the granting, crediting, vesting or payment of benefits under the Plan. There shall be deducted...

  • Page 193
    ... all claims against the Committee, its members and the Company. The Committee may require such Participant or Beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect. 9.7 Errors in Account Statements, Deferrals or Distributions. In the event an error is...

  • Page 194
    ... ERISA. IN WITNESS WHEREOF, the Board of Directors of the Company has approved the adoption of this Plan as of the Effective Date and has caused the Plan to be executed by its duly authorized representative this [19th day of August, 2009.] General Nutrition Centers, Inc. By /s/ Robert Chessen Title...

  • Page 195
    ...Later NonQualified Deferred Compensation Plan and Trust, which they deem necessary or appropriate. The purpose of this consent is to adopt the Trust Agreement containing the terms and conditions governing the relationship between Merrill Lynch Bank & Trust Co., FSB and General Nutrition Centers, Inc...

  • Page 196
    ...for fixed charges (income before income taxes and fixed charges) by fixed charges (interest cost, amortization of debt expense, and the portion of rental expenses deemed to be representative of the interest factor in those rentals). Computation of General Nutrition Centers, Inc. Ratio of Earnings to...

  • Page 197
    QuickLinks Exhibit 12.1 RATION OF EARNINGS TO FIXED CHARGES

  • Page 198
    ... of Incorporation, Organization or Formation GNC Funding, Inc. General Nutrition Corporation General Nutrition Investment Company GNC Puerto Rico, Inc. General Nutrition Centres Company GNC Columbia SAS GNC Transportation, LLC Delaware Pennsylvania Arizona Puerto Rico Canada (Nova Scotia) Columbia...

  • Page 199
    QuickLinks Exhibit 21.1 Subsidiaries of the Company

  • Page 200
    ... and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 25, 2011 /s/ JOSEPH M. FORTUNATO Joseph M. Fortunato Chief Executive...

  • Page 201
    QuickLinks Exhibit 31.1 Certification of Chief Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

  • Page 202
    ...in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who...

  • Page 203
    QuickLinks Exhibit 31.2 Certification of Chief Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

  • Page 204
    ...Report on Form 10-K of General Nutrition Centers, Inc. (the "Company"), for the year ended December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Joseph M. Fortunato, as Chief Executive Officer of the Company and Michael M. Nuzzo, as Chief Financial...

  • Page 205
    QuickLinks Exhibit 32.1 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002