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General Nutrition Centers, Inc. Reports Fourth Quarter 2009 Results
Date:3/3/2010

PITTSBURGH, March 3 /PRNewswire/ -- General Nutrition Centers, Inc. ("GNC" or the "Company"), a leading global specialty retailer of nutritional products, today reported its financial results for the year and quarter ended December 31, 2009.

For the fourth quarter of 2009, the Company reported net income of $12.7 million, a $4.6 million, or 56.3%, increase over net income of $8.1 million for the fourth quarter of 2008. Net income as a percentage of revenue was 3.1% in the fourth quarter of 2009 as compared to 2.1% in the fourth quarter of 2008.

For the fourth quarter of 2009, the Company reported consolidated revenue of $403.9 million, an increase of 3.1% over the consolidated revenue of $391.7 million for the fourth quarter of 2008. Revenue increased in each of the Company's segments: retail by 3.2%, franchise by 4.3%, and manufacturing/wholesale by 1.1%. Same store sales improved 1.2% in domestic Company-owned stores (including e-commerce sales) representing the 18th consecutive quarter of positive same store sales.

Earnings before interest, income taxes, depreciation, amortization and non-cash stock-based compensation ("Adjusted EBITDA") for the fourth quarter of 2009 was $50.6 million, a $4.4 million, or 9.5%, increase over the Adjusted EBITDA of $46.2 million for the fourth quarter of 2008. Adjusted EBITDA was 12.5% as a percentage of revenue in the fourth quarter of 2009, compared to 11.8% in the fourth quarter of 2008.

For the fourth quarter of 2009, the Company generated net cash from operations of $36.1 million, incurred capital expenditures of approximately $8.2 million, and paid approximately $5.4 million in principal on outstanding debt. At December 31, 2009, the Company's cash balance was $75.1 million.

In the fourth quarter of 2009, the Company opened 25 net new domestic Company-owned stores, 1 net new Company-owned store in Canada, 50 net new international franchise locations, and 55 net new franchise store-within-a- store Rite Aid locations, and closed 10 net domestic franchise locations.

The Company announced last month that it, together with its parent company, had entered into a memorandum of understanding to form a strategic partnership with Shanghai-based Bright Food (Group) Co, LTD. This partnership, to be named GNC China, will participate in China's nutritional products market and promote the GNC brands in China's large to medium-sized cities.

Joe Fortunato, Chief Executive Officer, said, "The fourth quarter capped a successful 2009, as we continued to grow revenue, profit, Adjusted EBITDA margin, and cash generation. Equally important, we made key investments in the business and launched several initiatives, including our China venture, to provide a foundation for future growth. We remain focused on science and product innovation that will continue to strengthen GNC's leading position in the health and wellness industry."

For the year ended December 31, 2009, the Company reported net income of $69.6 million; a $14.8 million, or 27.1%, increase over net income of $54.8 million for 2008. Net income as a percentage of revenue was 4.1% for the year ended December 31, 2009 compared to 3.3% for 2008.

For the year ended December 31, 2009, the Company reported consolidated revenue of $1,707.0 million, an increase of $50.3 million, or 3.0%, over the consolidated revenue of $1,656.7 million for the year ended December 31, 2008. Revenue increased in each of the Company's business segments: retail by 3.0%, franchise by 2.4%, and manufacturing / wholesale by 4.0%. For the year, same store sales improved 2.8% in domestic Company-owned stores (including e- commerce sales).

Adjusted EBITDA was $230.7 million for the year ended December 31, 2009, a $15.9 million, or 7.4%, increase over the Adjusted EBITDA of $214.8 million for the year ended December 31, 2008. Adjusted EBITDA improved to 13.5% as a percentage of revenue for the year ended December 31, 2009 compared to 13.0% for 2008.

For the year ended December 31, 2009, the Company generated net cash from operations of $114.0 million, incurred capital expenditures of $28.7 million, and paid approximately $25.3 million in principal on outstanding debt.

For the year ended December 31, 2009, the Company opened 51 net new domestic Company-owned stores, 7 net new Company-owned stores in Canada, 117 net new international franchise locations, and 157 net new franchise store- within-a-store Rite Aid locations and closed 45 net domestic franchise locations.

General Nutrition Centers, Inc., headquartered in Pittsburgh, Pa., is a leading global specialty retailer of nutritional products including vitamin, mineral, herbal and other specialty supplements and sports nutrition, diet and energy products. General Nutrition Centers, Inc. is an indirect wholly owned subsidiary of GNC Parent LLC, which was acquired by affiliates of Ares Management LLC and Ontario Teachers' Pension Plan Board through a merger on March 16, 2007.

As of December 31, 2009, GNC has more than 6,900 locations, of which more than 5,400 retail locations are in the United States (including 909 franchise and 1,869 Rite Aid franchise store-within-a-store locations) and franchise operations in 47 countries. The Company -- which is dedicated to helping consumers Live Well -- also offers products and product information online at www.gnc.com. GNC has scheduled a conference call and webcast to report its fourth quarter 2009 financial results on Thursday, March 11, 2010 at 11:00 am EST. To listen to this call dial 1-866-468-1032 inside the U.S. and 1-832- 445-1665 outside the U.S. The conference identification number for international participants only is 59306888. A webcast of the call will also be available through the "About GNC" link on www.gnc.com through April 2, 2010.

This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business that is not historical information. Forward-looking statements can be identified by the use of terminology such as "subject to," "believes," "anticipates," "plans," "expects," "intends," "estimates," "projects," "may," "will," "should," "can," the negatives thereof, variations thereon and similar expressions, or by discussions of strategy. While GNC believes there is a reasonable basis for its expectations and beliefs, they are inherently uncertain, and the Company may not realize its expectations and its beliefs may not prove correct. GNC undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Actual results could differ materially from those described or implied by such forward-looking statements. For a listing of factors that may materially affect such forward-looking statements, please refer to our quarterly and annual filings with the Securities and Exchange Commission.

Adjusted EBITDA is a non-GAAP financial measure within the meaning of the Securities and Exchange Commission's Regulation G. Management has included this information because it believes it represents a more effective means by which to measure the Company's operating performance. This press release contains a reconciliation of the non-GAAP measure to the financial measure calculated and presented in accordance with GAAP which is most directly comparable to the applicable non-GAAP financial measure.


             GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
                   Consolidated Statements of Operations
                               (in thousands)

                          Three months ended          Year ended
                      ------------------------  ------------------------
                      December 31, December 31, December 31, December 31,
                           2009         2008        2009         2008
                      -----------  -----------  -----------  -----------
                              (unaudited)        (unaudited)
Revenue                  $403,896     $391,740   $1,707,007   $1,656,729

Cost of sales, including

costs of warehousing,

 distribution and
 occupancy                267,196      259,487    1,116,437    1,082,630
                      -----------  -----------  -----------  -----------
Gross profit              136,700      132,253      590,570      574,099

Compensation and
 related benefits          66,725       61,987      263,046      249,793
Advertising and
 promotion                  9,857        9,708       50,034       55,060
Other selling, general
 and administrative        22,448       25,228       96,454       98,732
Foreign currency
 (gain) loss                 (128)         594         (155)         733
                      -----------  -----------  -----------  -----------
Operating income           37,798       34,736      181,191      169,781

Interest expense, net 16,937 20,782 69,953 83,000

                      -----------  -----------  -----------  -----------

Income before income

 taxes                     20,861       13,954      111,238       86,781

Income tax expense          8,179        5,838       41,619       32,001
                      -----------  -----------  -----------  -----------

Net income                $12,682       $8,116      $69,619      $54,780
                      ===========  ===========  ===========  ===========


                          Three months ended           Year ended
                      ------------------------  ------------------------
                      December 31, December 31, December 31, December 31,
                           2009         2008         2009         2008
                      -----------  -----------  -----------  -----------
                              (unaudited)              (unaudited)
Net income                $12,682       $8,116      $69,619      $54,780
Interest expense, net      16,937       20,782       69,953       83,000
Income tax expense          8,179        5,838       41,619       32,001
Depreciation and
 amortization              12,031       11,093       46,665       42,453
Non-cash stock-based

compensation expense 793 413 2,855 2,594

                      -----------  -----------  -----------  -----------
Adjusted EBITDA           $50,622      $46,242     $230,711     $214,828
                      ===========  ===========  ===========  ===========

We define Adjusted EBITDA as net income before interest expense (net), income tax expense, depreciation, amortization and non-cash stock-based compensation. Management uses Adjusted EBITDA as a tool to measure operating performance of the business. We use Adjusted EBITDA as one criterion for evaluating our performance relative to our competitors and also as a measurement for the calculation of management incentive compensation. Although we primarily view Adjusted EBITDA as an operating performance measure, we also consider it to be a useful analytical tool for measuring our liquidity, our leverage capacity, and our ability to service our debt and generate cash for other purposes. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income, operating income, or any other performance measures derived in accordance with GAAP, or as an alternative to GAAP cash flow from operating activities, as a measure of our profitability or liquidity.



           GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
                 Condensed Consolidated Balance Sheets
                             (in thousands)

                                             December 31, December 31,
                                                  2009         2008
                                             -----------  -----------
Current assets:                              (unaudited)
  Cash and cash equivalents                      $75,089      $42,307
  Receivables, net                                94,355       89,413
  Inventories, net                               370,492      363,654
  Prepaids and other current assets               42,219       59,407
                                             -----------  -----------
    Total current assets                         582,155      554,781

Long-term assets:
  Goodwill, brands and other
   intangibles, net                            1,499,123    1,506,085
  Property, plant and equipment, net             199,581      206,154
  Other long-term assets                          22,743       24,988
                                             -----------  -----------
    Total long-term assets                     1,721,447    1,737,227

                                             -----------  -----------
      Total assets                            $2,303,602   $2,292,008
                                             ===========  ===========

Current liabilities:
  Accounts payable                               $95,904     $123,577
  Other current liabilities                      103,683      126,145
                                             -----------  -----------
    Total current liabilities                    199,587      249,722

Long-term liabilities:
  Long-term debt                               1,058,085    1,071,237
  Other long-term liabilities                    328,414      318,987
                                             -----------  -----------
    Total long-term liabilities                1,386,499    1,390,224

                                             -----------  -----------
      Total liabilities                        1,586,086    1,639,946

    Total stockholder's equity                   717,516      652,062

                                             -----------  -----------
      Total liabilities and
       stockholder's equity                   $2,303,602   $2,292,008
                                             ===========  ===========



           GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
            Condensed Consolidated Statements of Cash Flows
                            (in thousands)

                                                     Year ended
                                             -------------------------
                                             December 31,  December 31,
                                                2009          2008
                                             -----------   -----------
                                             (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
-------------------------------------
Net income                                       $69,619       $54,780

Adjustments to reconcile net income to

 net cash provided by operating activities:
-------------------------------------------
  Depreciation and amortization expense           46,665        42,453

Amortization of deferred financing costs 4,478 4,246

  Non-cash stock-based compensation                2,855         2,594
  Other                                           30,042        39,030
Changes in:
  Receivables                                     (3,488)       (5,371)
  Inventory                                      (15,661)      (48,248)
  Accounts payable                               (28,119)       22,075
  Other assets and liabilities                     7,566       (34,194)
                                             -----------   -----------
    Net cash provided by operating activities    113,957        77,365
                                             -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------
  Capital expenditures                           (28,682)      (48,666)
  Acquisition of the Company                     (11,268)      (10,842)
  Other                                           (2,224)         (917)
                                             -----------   -----------
    Net cash used in investing activities        (42,174)      (60,425)
                                             -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------
  Dividend payment                               (13,600)            -
  Borrowings on debt                                   -         5,375
  Payments on long-term debt                     (25,327)       (7,974)
  Other                                             (323)         (832)
                                             -----------   -----------
    Net cash used in financing activities        (39,250)       (3,431)
                                             -----------   -----------

Effect of exchange rate on cash                      249           (56)
                                             -----------   -----------
Net increase in cash                              32,782        13,453
Beginning balance, cash                           42,307        28,854
                                             -----------   -----------
Ending balance, cash                             $75,089       $42,307
                                             ===========   ===========



Segment Financial Data and Store Counts


Retail Segment - Company-owned stores in the U.S. and Canada as well as e-
commerce


                              Three months ended          Year ended
                                   December 31,          December 31,
$ in thousands                   2009      2008        2009        2008
                              --------  --------  ----------  ----------

Revenue                       $293,728  $284,681  $1,256,314  $1,219,305
Comp Store Sales - Domestic       1.2%      2.5%        2.8%        2.7%
Operating income               $29,865   $29,248    $153,142    $140,916


Franchise Segment- Franchise-operated Domestic and International locations


                              Three months ended          Year ended
                                   December 31,          December 31,
$ in thousands                   2009      2008        2009        2008
                              --------  --------  ----------  ----------

Revenue                        $63,104   $60,508    $264,168    $258,020
Operating income               $19,557   $19,699     $80,800     $80,816


Wholesale/ Manufacturing Segment- Third-party contract manufacturing; wholesale and consignment sales with Rite Aid and drugstore.com


                              Three months ended          Year ended
                                   December 31,          December 31,
$ in thousands                   2009      2008        2009        2008
                              --------  --------  ----------  ----------

Revenue                        $47,064   $46,551    $186,525    $179,404
Operating income               $19,378   $15,389     $73,450     $67,378


Consolidated unallocated costs (a)


                              Three months ended          Year ended
                                   December 31,          December 31,
$ in thousands                   2009      2008        2009        2008
                              --------  --------  ----------  ----------

Warehousing and
 distribution costs           $(13,099) $(13,121)   $(53,557)   $(54,266)
Corporate costs               $(17,903) $(16,479)   $(72,644)   $(65,063)

(a) Part of consolidated operating income

Consolidated Store Count Activity



                               Year ended December 31, 2009
                    ----------------------------------------------------
                                           Franchised stores
                    Company-    ----------------------------------------
                     owned (2)  Domestic  International  Rite Aid  Total
                    ---------   --------  -------------  --------  -----

Beginning of period

 balance                2,774        954          1,190     1,712  6,630
  Store openings (1)       98         31            187       177    493
  Store closings          (40)       (76)           (70)      (20)  (206)
                    ---------   --------  -------------  --------  -----

End of period balance 2,832 909 1,307 1,869 6,917

                    =========   ========  =============  ========  =====

                               Year ended December 31, 2008
                    ----------------------------------------------------
                                           Franchised stores
                    Company-    ----------------------------------------
                     owned (2)  Domestic  International  Rite Aid  Total
                    ---------   --------  -------------  --------  -----

Beginning of period

 balance                2,745        978          1,078     1,358  6,159
  Store openings (1)      104         41            198       401    744
  Store closings          (75)       (65)           (86)      (47)  (273)
                    ---------   --------  -------------  --------  -----

End of period balance 2,774 954 1,190 1,712 6,630

                    =========   ========  =============  ========  =====


(1) openings include new stores and corporate/franchise conversion

    activity

(2) including Canada

SOURCE General Nutrition Centers, Inc.

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SOURCE General Nutrition Centers, Inc.
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