GNC 2011 Annual Report Download - page 114

Table of Contents
NOTE 19. SEGMENTS (Continued)
The following table represents sales by general product category. The category "Other" includes other wellness products sales from the Company's
point of sales system and certain required accounting adjustments of $6.5 million, $5.7 million, and $4.7 million for the years ended December 31, 2010, 2009
and 2008, respectively.
December 31,
2010 2009 2008
(in thousands)
U.S Retail Product Categories:
VMHS $ 496,093 $ 496,427 $ 465,245
Sports Nutrition Products 531,269 443,408 410,133
Diet and Weight Management Products 122,259 128,039 148,158
Other Wellness Products 100,058 99,886 106,681
Total U.S. Retail revenues 1,249,679 1,167,759 1,130,217
Canada retail revenues(1) 94,679 88,555 89,088
Total Retail Revenue $ 1,344,358 $ 1,256,314 $ 1,219,305
Canada sales are presented in total not by category as product sales for Canada are managed in local currency.(1)
The data above represents the majority of the revenue reported for the domestic portion of the Company's retail segment. In addition to these sales,
additional revenue and revenue adjustments are recorded to ensure conformity with U.S. GAAP. This includes wholesale revenue (to the Company's military
commissary locations), deferral of 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 revenues are primarily generated from (1) product sales to franchisees,
(2) royalties from franchise retail sales and (3) franchise fees, and Manufacturing/Wholesale sales are generated from sales of manufactured products to third
parties, primarily in the VMHS product category.
NOTE 20. FRANCHISE REVENUE
The Company's Franchise segment generates revenues through product sales to franchisees, royalties, franchise fees and interest income on the
financing of the franchise locations. The Company enters into franchise agreements with initial terms of ten years. The Company charges franchisees three
types of flat franchise fees associated with stores: initial, transfer and renewal. The initial franchise fee is payable prior to the franchise store opening as
consideration for the initial franchise rights and services performed by the Company. Transfer fees are paid as consideration for the same rights and services
as the initial fee and occur when a former franchisee transfers ownership of the franchise location to a new franchisee. This is typically a reduced fee
compared to the initial franchise fee. The renewal franchise fee is charged to existing franchisees upon renewal of the franchise contract. This fee is similar to,
but typically less than, the initial fee.
Once the franchise store is opened, transferred or renewed, the Company has no further obligations under these fees to the franchisee. Therefore, all
initial, transfer and renewal franchise fee revenue is recognized in the period in which a franchise store is opened, transferred or date the
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