10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark one)

[ X ]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2013
[     ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                     to                    .

Commission File Number:  001-35113

GNC Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	20-8536244
(State or other jurisdiction of	(I.R.S. Employer
Incorporation or organization)	Identification No.)
300 Sixth Avenue	15222
Pittsburgh, Pennsylvania	(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code:  (412) 288-4600

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     [ X ] Yes [    ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  [ X  ] Yes [    ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer [X] Accelerated filer [   ] Non-accelerated filer [   ] Smaller reporting company [   ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [      ] Yes [ X ] No

As of April 26, 2013, there were 98,319,365 outstanding shares of Class A common stock, par value $0.001 per share (the “Class A common stock”), of GNC Holdings, Inc.

TABLE OF CONTENTS

		PAGE
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of March 31, 2013 (unaudited) and December 31, 2012	1
	Unaudited Consolidated Statements of Income for the three months ended March 31, 2013 and 2012	2
	Unaudited Consolidated Statements of Comprehensive Income for the three months ended March 31, 2013 and 2012	2
	Unaudited Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2013 and 2012	3
	Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012	4
	Summarized Notes to Unaudited Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	25
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	27
Signatures		28

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

GNC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, including share data)

	March 31,		December 31,
	2013		2012
Current assets:	(unaudited)
Cash and cash equivalents	$	176,164	$	158,541
Receivables, net	137,659		129,641
Inventories (Note 3)	510,719		491,599
Prepaids and other current assets	41,769		39,016
Total current assets	866,311		818,797
Long-term assets:
Goodwill (Note 4)	641,024		639,915
Brands (Note 4)	720,000		720,000
Other intangible assets, net (Note 4)	139,783		141,717
Property, plant and equipment, net	198,928		199,487
Other long-term assets	33,142		32,124
Total long-term assets	1,732,877		1,733,243
Total assets	$	2,599,188	$	2,552,040
Current liabilities:
Accounts payable	$	138,621	$	125,165
Current portion, long-term debt (Note 5)	3,816		3,817
Deferred revenue and other current liabilities	142,011		116,337
Total current liabilities	284,448		245,319
Long-term liabilities:
Long-term debt (Note 5)	1,093,930		1,094,745
Deferred tax liabilities, net	283,576		283,203
Other long-term liabilities	48,349		46,734
Total long-term liabilities	1,425,855		1,424,682
Total liabilities	1,710,303		1,670,001
Stockholders’ equity:
Common stock, $0.001 par value, 330,000 shares authorized:
Class A, 112,176 shares issued and 98,190 shares outstanding and 13,986 shares held in treasury at March 31, 2013 and 111,725 shares issued and 99,244 shares outstanding and 12,481 shares held in treasury at December 31, 2012	111		111
Paid-in-capital	820,964		810,094
Retained earnings	550,570		492,687
Treasury stock, at cost	(485,210)		(423,900)
Accumulated other comprehensive income	2,450		3,047
Total stockholders’ equity	888,885		882,039
Total liabilities and stockholders’ equity	$	2,599,188	$	2,552,040

The accompanying notes are an integral part of the consolidated financial statements.

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GNC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(unaudited)

(in thousands, except per share data)

	Three months ended March 31,
	2013			2012
Revenue	$		664,691	$		624,272
Cost of sales, including cost of warehousing, distribution and occupancy	408,554			383,563
Gross profit	256,137			240,709
Compensation and related benefits	79,545			80,044
Advertising and promotion	20,440			16,219
Other selling, general and administrative	31,665			31,784
Foreign currency gain	(33)			(93)
Transaction related costs	-			686
Operating income	124,520			112,069
Interest expense, net (Note 5)	11,015			10,383
Income before income taxes	113,505			101,686
Income tax expense (Note 10)	40,862			37,829
Net income	$		72,643	$		63,857
Income per share - Basic and Diluted:
Earnings per share:
Basic	$		0.73	$		0.60
Diluted	$		0.73	$		0.59
Weighted average common shares outstanding:
Basic	98,997			105,805
Diluted	99,861			107,746
Dividends declared per share:	$		0.15	$		0.11
Consolidated Statements of Comprehensive Income (unaudited) (in thousands)
	Three months ended March 31,
	2013			2012
Net income	$	72,643		$	63,857
Other comprehensive income:
Foreign currency translation adjustments	(597)			354
Other comprehensive income	(597)			354
Comprehensive income	$	72,046		$	64,211

The accompanying notes are an integral part of the consolidated financial statements.

2

GNC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands, including per share data)

													Accumulated
	Common Stock												Other		Total
	Class A			Class B			Treasury		Paid-in-		Retained		Comprehensive		Stockholders’
	Shares	Dollars		Shares	Dollars		Stock		Capital		Earnings		Income/(Loss)		Equity
Balance at December 31, 2012	99,244	$	111	-	$	-	$	(423,900)	$	810,094	$	492,687	$	3,047	$	882,039
Comprehensive income	-	-		-	-		-		-		72,643		(597)		72,046
Repurchase of treasury stock	(1,504)	-		-	-		(61,310)		-		-		-		(61,310)
Common stock dividends	-	-		-	-		-		-		(14,760)		-		(14,760)
Conversions to common stock	450	-		-	-		-		9,055		-		-		9,055
Non-cash stock-based compensation	-	-		-	-		-		1,815		-		-		1,815
Balance at March 31, 2013 (unaudited)	98,190	$	111	-	$	-	$	(485,210)	$	820,964	$	550,570	$	2,450	$	888,885
Balance at December 31, 2011	102,985	$	105	2,060	$	2	$	(65,048)	$	741,848	$	298,831	$	2,724	$	978,462
Comprehensive income	-	-		-	-		-		-		63,857		354		64,211
Conversion of Class B stock to Class A stock	2,060	2		(2,060)	(2)		-		-		-		-		-
Repurchase of treasury stock	(165)	-		-	-		(4,748)		-		-		-		(4,748)
Common stock dividends	-	-		-	-		-		-		(11,724)		-		(11,724)
Conversions to common stock	2,183	2		-	-		-		32,240		-		-		32,242
Non-cash stock-based compensation	-	-		-	-		-		1,176		-		-		1,176
Other	-	-		-	-		-		-		(1,051)		-		(1,051)
Balance at March 31, 2012 (unaudited)	107,063	$	109	-	$	-	$	(69,796)	$	775,264	$	349,913	$	3,078	$	1,058,568

The accompanying notes are an integral part of the consolidated financial statements.

3

GNC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	Three Months Ended March 31,
	2013		2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	72,643	$	63,857
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	12,549		12,335
Amortization of debt costs	629		582
Increase in provision for inventory losses	3,993		2,797
Increase in receivables	(9,418)		(10,455)
Increase in inventory	(23,058)		(55,884)
Increase in prepaids and other current assets	(5,049)		(1,614)
Increase in accounts payable	13,256		37,473
Increase in deferred revenue and other current liabilities	27,599		19,221
Other operating activities	2,383		2,404
Net cash provided by operating activities	95,527		70,716
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(9,917)		(9,220)
Other investing activities	(682)		(1,388)
Net cash used in investing activities	(10,599)		(10,608)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to shareholders	(14,728)		(11,497)
Payments on long-term debt	(943)		(415)
Proceeds from exercised stock options	4,342		12,936
Tax benefit from exercise of stock options	5,086		20,625
Repurchase of treasury stock	(61,310)		(5,885)
Other financing activities	-		(2,500)
Net cash (used in) provided by financing activities	(67,553)		13,264
Effect of exchange rate on cash and cash equivalents	248		(236)
Net increase in cash and cash equivalents	17,623		73,136
Beginning balance, cash and cash equivalents	158,541		128,438
Ending balance, cash and cash equivalents	$	176,164	$	201,574

The accompanying notes are an integral part of the consolidated financial statements.

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NOTE 1.  NATURE OF BUSINESS

General Nature of Business. GNC Holdings, Inc., a Delaware corporation (“Holdings,” and collectively with its subsidiaries and, unless the context requires otherwise, its and their respective predecessors, the “Company”), is a global specialty retailer of health and wellness products, which include: vitamins, minerals and herbal supplements, sports nutrition products, diet products and other wellness products.

The Company is vertically integrated, as its operations consist of purchasing raw materials, formulating and manufacturing products and selling the finished products through its three segments: Retail, Franchising and Manufacturing/Wholesale. Corporate retail store operations are located in the United States, Canada and Puerto Rico, and in addition, the Company offers products domestically through GNC.com, LuckyVitamin.com and www.drugstore.com. Franchise stores are located in the United States and over 50 international countries (including distribution centers where retail sales are made). The Company operates its primary manufacturing facilities in South Carolina and distribution centers in Arizona, Pennsylvania and South Carolina. The Company manufactures the majority of its branded products, but also merchandises various third-party products. Additionally, the Company licenses the use of its trademarks and trade names.

The processing, formulation, packaging, labeling and advertising of the Company’s products are subject to regulation by one or more federal agencies, including the Food and Drug Administration (the “FDA”), the Federal Trade Commission, the Consumer Product Safety Commission, the United States Department of Agriculture and the Environmental Protection Agency. These activities are also regulated by various agencies of the states and localities in which the Company’s products are sold.

Recent Significant Transactions. In April 2011, Holdings consummated an initial public offering (the “IPO”) of 25.9 million shares of its Class A common stock, par value $0.001 per share (the “Class A common stock”), at an IPO price of $16.00 per share. Prior to the IPO, Holdings’ outstanding common stock was principally owned by Ontario Teachers’ Pension Plan Board (“OTPP”) and Ares Corporate Opportunities Fund II L.P. (“Ares”, and together with OTPP, collectively referred to as the “Sponsors”). On March 19, 2012, OTPP converted all of its shares of Class B common stock into an equal number of shares of Class A common stock. Subsequent to the IPO, certain of Holdings’ stockholders, including the Sponsors, completed the following registered offerings of Class A common stock:

·in October 2011, 23.0 million shares at $24.75 per share;

·in March 2012, 19.6 million shares at $33.50 per share;

·in August 2012,10.0 million shares at $38.42 per share; and,

·in November 2012, 11.7 million shares at $35.20 per share.

In conjunction with the August 2012 offering, the Company repurchased an additional six million shares of Class A common stock from Ares as part of a share repurchase program. As of December 31, 2012, Ares no longer owns any shares of our capital stock and OTPP owns less than 10,000 shares of our Class A common stock.

As of March 31, 2013, the Company had completed $61.3 million of its February 2013 approved $250.0 million share repurchase program of Class A common stock.

In March 2011, GNC Corporation and General Nutrition Centers, Inc., each a wholly owned subsidiary of Holdings, entered into a Credit Agreement (the “Credit Agreement”) that provided for a $1.2 billion term loan (the “Term Loan Facility”) and an $80.0 million revolving credit facility (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Senior Credit Facility”). On August 1, 2012, the Credit Agreement was amended to increase the outstanding borrowings by $200.0 million (the “Incremental Term Loan”).  In October 2012, the Credit Agreement was amended to adjust the per annum interest rate to the greater of LIBOR and 1.00%, plus an applicable margin of 2.75% (the “Repricing”).

NOTE 2.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. The year-end consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s audited financial statements in Holdings’ Annual Report on Form 10-K filed for the year ended December 31, 2012. There have been no material changes to the application of significant accounting policies and significant judgments and estimates since December 31, 2012.

5

The accompanying unaudited consolidated financial statements include all adjustments (consisting of a normal and recurring nature) that management considers necessary for a fair statement of financial information for the interim periods. Interim results are not necessarily indicative of the results that may be expected for the remainder of the year ending December 31, 2013.

Principles of Consolidation. The consolidated financial statements include the accounts of Holdings and all of its subsidiaries. All material intercompany transactions have been eliminated in consolidation.

The Company has no relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off balance sheet arrangements, or other contractually narrow or limited purposes.

Use of Estimates.  The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Accordingly, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Some of the most significant estimates pertaining to the Company include the valuation of inventories, the allowance for doubtful accounts and income taxes. On a regular basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.

Transaction Related Costs.  The Company recognizes transaction related costs as expenses in the period incurred.  For the three months ended March 31, 2013, the Company incurred no transaction related costs. For the three months ended March 31, 2012, the Company incurred $0.7 million of expenses related to the March 2012 offering.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (the “FASB”) issued an accounting standard regarding the reclassification of amounts out of accumulated other comprehensive income (“AOCI”).  This standard does not change the current requirements for reporting net income or other comprehensive income. However, the standard requires disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement of operations or in the footnotes to the financial statements. Amounts that are not required to be reclassified in their entirety to net income must be cross-referenced to other disclosures that provide additional detail. This guidance is effective for fiscal years beginning after December 15, 2012. The Company adopted this guidance during the first quarter of 2013. The adoption of this guidance had no material impact on the Company’s consolidated financial statements.

NOTE 3.  INVENTORIES

The net carrying value of inventories consisted of the following:

	March 31,		December 31,
	2013		2012
	(unaudited)
	(in thousands)
Finished product ready for sale	$	427,837	$	415,096
Work-in-process, bulk product and raw materials	75,982		70,022
Packaging supplies	6,900		6,481
Total	$	510,719	$	491,599

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NOTE 4. GOODWILL AND INTANGIBLE ASSETS, NET

For the three months ended March 31, 2013 and 2012, the Company acquired 7 and 13 franchise stores, respectively. These acquisitions were accounted for using the purchase method of accounting and the Company recorded the acquired inventory, fixed assets, franchise rights and goodwill, with an applicable reduction to receivables and cash. For the three months ended March 31, 2013 and 2012, the total purchase price associated with these acquisitions was $1.7 million and $2.6 million, respectively, of which $1.2 million and $1.1 million, respectively, was paid in cash.

The following table summarizes the Company’s goodwill activity:

					Manufacturing/
	Retail		Franchising		Wholesale		Total
	(in thousands)
Balance at December 31, 2012	$	319,771	$	117,303	$	202,841	$	639,915
Acquired franchise stores	1,109		-		-		1,109
Balance at March 31, 2013 (unaudited)	$	320,880	$	117,303	$	202,841	$	641,024

Intangible assets other than goodwill consisted of the following:

	Retail		Franchise		Operating		Other
	Brand		Brand		Agreements		Intangibles		Total
	(in thousands)
Balance at December 31, 2012	$	500,000	$	220,000	$	132,317	$	9,400	$	861,717
Acquired franchise stores	-		-		-		186		186
Amortization expense	-		-		(1,663)		(457)		(2,120)
Balance at March 31, 2013 (unaudited)	$	500,000	$	220,000	$	130,654	$	9,129	$	859,783

The following table reflects the gross carrying amount and accumulated amortization for each major intangible asset:

	Weighted -	March 31, 2013						December 31, 2012
	Average			Accumulated		Carrying				Accumulated		Carrying
	Life	Cost		Amortization		Amount		Cost		Amortization		Amount
				(unaudited)
		(in thousands)
Brands - retail	-	$	500,000	$	-	$	500,000	$	500,000	$	-	$	500,000
Brands - franchise	-	220,000		-		220,000		220,000		-		220,000
Retail agreements	30.2	31,000		(6,512)		24,488		31,000		(6,249)		24,751
Franchise agreements	25.0	70,000		(16,917)		53,083		70,000		(16,217)		53,783
Manufacturing agreements	25.0	70,000		(16,917)		53,083		70,000		(16,217)		53,783
Other intangibles	11.4	10,600		(2,454)		8,146		10,600		(2,151)		8,449
Franchise rights	3.7	5,320		(4,337)		983		5,134		(4,183)		951
Total	24.5	$	906,920	$	(47,137)	$	859,783	$	906,734	$	(45,017)	$	861,717

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The following table represents future estimated amortization expense of intangible assets with finite lives at March 31, 2013:

	Estimated
	amortization
Years ending December 31,	expense
	(unaudited)
	(in thousands)
2013	$	6,330
2014	8,177
2015	8,034
2016	7,948
2017	7,898
Thereafter	101,396
Total	$	139,783

NOTE 5.  LONG-TERM DEBT / INTEREST EXPENSE

Long-term debt consisted of the following:

	March 31,		December 31,
	2013		2012
	(unaudited)
	(in thousands)
Senior Credit Facility	$	1,095,739	$	1,096,112
Mortgage	2,003		2,444
Capital leases	4		6
Total debt	1,097,746		1,098,562
Less: current maturities	(3,816)		(3,817)
Long-term debt	$	1,093,930	$	1,094,745

For the three months ended March 31, 2013 and 2012, interest expense was $11.0 million and $10.4 million, respectively, and consisted primarily of interest on outstanding borrowings under the Term Loan Facility. Interest under both the Term Loan Facility and the Revolving Credit Facility is based on variable rates. At both March 31, 2013 and December 31, 2012, the interest rate under the Term Loan Facility was 3.75% and the interest rate under the Revolving Credit Facility was 3.00%. The Revolving Credit Facility was undrawn and had outstanding letters of credit of $1.1 million at both March 31, 2013 and December 31, 2012.

As of March 31, 2013, the Company believes that it is in compliance with all covenants under the Senior Credit Facility.

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NOTE 6.  FINANCIAL INSTRUMENTS

At March 31, 2013 and December 31, 2012, the Company’s financial instruments consisted of cash and cash equivalents, receivables, franchise notes receivable, accounts payable, certain accrued liabilities and long-term debt. The carrying amount of cash and cash equivalents, receivables, accounts payable and accrued liabilities approximates their respective fair values because of the short maturities of these instruments. Based on the interest rates currently available and their underlying risk, the carrying value of the franchise notes receivable approximates their respective fair values. These fair values are reflected net of reserves for uncollectible amounts. As considerable judgment is required to determine these estimates and assumptions, changes in the assumptions or methodologies may have an effect on these estimates. The Company determined the estimated fair values of its debt by using currently available market information. The fair value of debt is classified as a Level 2 category on the fair value hierarchy, as defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The actual and estimated fair values of the Company’s financial instruments are as follows:

	March 31, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(unaudited)
	(in thousands)
Cash and cash equivalents	$	176,164	$	176,164	$	158,541	$	158,541
Receivables, net	137,659		137,659		129,641		129,641
Franchise notes receivable, net	8,174		8,174		7,589		7,589
Accounts payable	138,621		138,621		125,165		125,165
Long-term debt (including current portion)	1,097,746		1,105,979		1,098,562		1,101,309

NOTE 7.  COMMITMENTS AND CONTINGENCIES

Litigation

The Company is engaged in various legal actions, claims and proceedings resulting from the Company’s business activities arising in the normal course of business, including claims related to breach of contracts, products liabilities, intellectual property matters and employment-related matters resulting from the Company’s business activities. As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. The Company continues to assess the requirement to account for additional contingencies in accordance with the standard on contingencies. If the Company is required to make a payment in connection with an adverse outcome in these matters, it could have a material impact on the Company’s business, financial condition, results of operations or cash flows.

As a manufacturer and retailer of nutritional supplements and other consumer products that are ingested by consumers or applied to their bodies, the Company has been and is currently subjected to various product liability claims. Although the effects of these claims to date have not been material to the Company, it is possible that current and future product liability claims could have a material adverse impact on its business or financial condition, results of operations, or cash flows. The Company currently maintains product liability insurance with a deductible/retention of $4.0 million per claim with an aggregate cap on retained loss of $10.0 million. The Company typically seeks and has obtained contractual indemnification from most parties that supply raw materials for its products or that manufacture or market products it sells. The Company also typically seeks to be added, and has been added, as an additional insured under most of such parties’ insurance policies. The Company is also entitled to indemnification by Numico for certain losses arising from claims related to products containing ephedra or Kava Kava sold prior to December 5, 2003. However, any such indemnification or insurance is limited by its terms and any such indemnification, as a practical matter, is limited to the creditworthiness of the indemnifying party and its insurer, and the absence of significant defenses by the insurers. The Company may incur material product liability claims, which could increase its costs and adversely affect its reputation, revenue and operating income.

Hydroxycut Claims. On May 1, 2009, the FDA issued a warning on several Hydroxycut-branded products manufactured by Iovate Health Sciences U.S.A., Inc. (“Iovate”). The FDA warning was based on 23 reports of liver injuries from consumers who claimed to have used the products between 2002 and 2009. As a result, Iovate voluntarily recalled 14 Hydroxycut-branded products.

Following the recall, the Company was named, among other defendants, in approximately 93 lawsuits related to Hydroxycut-branded products in 14 states.  Iovate previously accepted the Company’s tender request for defense and indemnification under its purchasing agreement with the Company and, as such, Iovate has accepted the Company’s request for defense and indemnification in the Hydroxycut matters. The Company’s ability to obtain full recovery in respect of any claims against the Company in connection with products manufactured by Iovate under the indemnity is dependent on Iovate’s insurance coverage, the creditworthiness of its insurer, and the absence of significant defenses by such insurer.  To the extent the Company is not fully compensated by Iovate’s insurer, it can seek recovery directly from Iovate.  The Company’s ability to fully recover such amounts may be limited by the creditworthiness of Iovate.

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As of March 31, 2013, there were 73 pending lawsuits related to Hydroxycut in which the Company has been named: 67 individual, largely personal injury claims and six putative class action cases, generally inclusive of claims of consumer fraud, misrepresentation, strict liability and breach of warranty.  In 2009, the United States Judicial Panel on Multidistrict Litigation consolidated pretrial proceedings of many of the pending actions in the Southern District of California (In re: Hydroxycut Marketing and Sales Practices Litigation, MDL No. 2087).  The parties in the consolidated class actions have reached a settlement, and the settlement has been preliminarily approved by the Court.  The parties’ motion for final approval of the settlement was heard on April 23, 2013.  The Company is not required to make any payments under the settlement.

As any liabilities that may otherwise arise from Hydroxycut claims against the Company are not probable or reasonably estimable at this time, no liability has been accrued in the accompanying financial statements.

Commitments

In addition to operating leases obtained in the normal course of business, the Company maintains certain purchase commitments with various vendors to ensure its operational needs are fulfilled.  As of March 31, 2013, such future purchase commitments consisted of $2.7 million.  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 or financial condition.

Environmental Compliance

In March 2008, the South Carolina Department of Health and Environmental Control (the “DHEC”) requested that the Company investigate contamination associated with historical activities at its South Carolina facility. These investigations have identified chlorinated solvent impacts in soils and groundwater that extend offsite from the facility. The Company entered into a Voluntary Cleanup Contract with the DHEC regarding the matter on September 24, 2012. Pursuant to that contract, the Company is working under the DHEC’s supervision to complete additional investigations to characterize the contamination. After the Company completes the investigations to understand the extent of the chlorinated solvent impacts, the Company will develop appropriate remedial measures for DHEC approval. At this stage of the investigation, however, it is not possible to estimate the timing and extent of any remedial action that may be required, the ultimate cost of remediation, or the amount of the Company’s potential liability.

In addition to the foregoing, the Company is subject to numerous federal, state, local and foreign environmental and health and safety laws and regulations governing its operations, including the handling, transportation and disposal of the Company’s non-hazardous and hazardous substances and wastes, as well as emissions and discharges from its operations into the environment, including discharges to air, surface water and groundwater. Failure to comply with these laws and regulations could result in costs for remedial actions, penalties or the imposition of other liabilities.  New laws, changes in existing laws or the interpretation thereof, or the development of new facts or changes in their processes could also cause the Company to incur additional capital and operating expenditures to maintain compliance with environmental laws and regulations and environmental permits. The Company is also subject to laws and regulations that impose liability and cleanup responsibility for releases of hazardous substances into the environment without regard to fault or knowledge about the condition or action causing the liability. Under certain of these laws and regulations, such liabilities can be imposed for cleanup of previously owned or operated properties, or for properties to which substances or wastes that were sent in connection with current or former operations at its facilities. The presence of contamination from such substances or wastes could also adversely affect the Company’s ability to sell or lease its properties, or to use them as collateral for financing. From time to time, the Company has incurred costs and obligations for correcting environmental and health and safety noncompliance matters and for remediation at or relating to certain of the Company’s properties or properties at which the Company’s waste has been disposed. However, compliance with the provisions of national, state and local environmental laws and regulations has not had a material effect upon the Company’s capital expenditures, earnings, financial position, liquidity or competitive position. The Company believes it has complied with, and is currently complying with, its environmental obligations pursuant to environmental and health and safety laws and regulations and that any liabilities for noncompliance will not have a material adverse effect on its business, financial performance or cash flows. However, it is difficult to predict future liabilities and obligations, which could be material.

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NOTE 8.  STOCK-BASED COMPENSATION PLANS

The Company has outstanding stock-based compensation awards that were granted by the Compensation Committee (the “Compensation Committee”) of Holdings’ board of directors under the following two stock-based employee compensation plans:

·the GNC Holdings, Inc. 2011 Stock and Incentive Plan (the “2011 Stock Plan”) adopted in March 2011; and

·the GNC Acquisition Holdings Inc. 2007 Stock Incentive Plan adopted in March 2007 (as amended, the “2007 Stock Plan”).

Both plans have provisions that allow for the granting of stock options, restricted stock and other stock based awards and are available to certain eligible employees, directors, consultants or advisors as determined by the Compensation Committee.  Stock options under the plans were granted with exercise prices at or above fair market value on the date of grant, typically vesting over a four-or five-year period, and expire seven or ten years from the date of grant.

Up to 8.5 million shares of Class A common stock may be issued under the 2011 Stock Plan (subject to adjustment to reflect certain transactions and events specified in the 2011 Stock Plan for any award grant). If any award granted under the 2011 Stock Plan expires, terminates or is cancelled without having been exercised in full, the number of shares underlying such unexercised award will again become available for awards under the 2011 Stock Plan. The total number of shares of Class A common stock available for awards under the 2011 Stock Plan will be reduced by (i) the total number of stock options or stock appreciation rights exercised, regardless of whether any of the shares of Class A common stock underlying such awards are not actually issued to the participant as the result of a net settlement, and (ii) any shares of Class A common stock used to pay any exercise price or tax withholding obligation. In addition, the number of shares of Class A common stock that are subject to restricted stock, performance shares or other stock-based awards that are not subject to the appreciation of the value of a share of Class A common stock (“Full Share Awards”) that may be granted under the 2011 Stock Plan is limited by counting shares granted pursuant to such awards against the aggregate share reserve as 1.8 shares for every share granted. If any stock option, stock appreciation right or other stock-based award that is not a Full Share Award is cancelled, expires or terminates unexercised for any reason, the shares covered by such awards will again be available for the grant of awards under the 2011 Stock Plan. If any shares of Class A common stock that are subject to restricted stock, performance shares or other stock-based awards that are Full Share Awards are forfeited for any reason, 1.8 shares of Class A common stock for each Full Share Award forfeited will again be available for the grant of awards under the 2011 Stock Plan.

The Company will not grant any additional awards under the 2007 Stock Plan.  No stock appreciation rights, restricted stock, deferred stock or performance shares were granted under the 2007 Stock Plan.

The Company utilizes the Black Scholes model to calculate the fair value of options under both the 2011 Stock Plan and the 2007 Stock Plan. The grant-date fair value of the Company’s restricted stock awards and restricted stock units is based on the closing price of a share of the Company’s common stock on the New York Stock Exchange on the date of the grant. The resulting compensation cost is recognized in the Company’s financial statements over the vesting period. The Company recognized $1.8 million and $1.2 million of total non-cash stock-based compensation expense for the three months ended March 31, 2013 and 2012, respectively. At March 31, 2013, there was approximately $19.5 million of total unrecognized compensation cost related to non-vested stock-based compensation for all awards previously made that are expected to be recognized over a weighted average period of approximately 2.0 years. All expense for the stock-based compensation plans is recorded to paid-in-capital.

During the three months ended March 31, 2013, the total intrinsic value of awards exercised was $13.8 million and the total amount received by Holdings from the exercise of options was $4.3 million. The tax impact associated with the exercise of awards for the three months ended March 31, 2013 was a benefit of $4.7 million, which was recorded to paid-in-capital.

During the three months ended March 31, 2012, the total intrinsic value of awards exercised was $55.9 million, and the total amount received by Holdings from the exercise of options was $13.5 million. The tax impact associated with the exercise of awards for the three months ended March 31, 2012 was a benefit of $19.3 million, which was recorded to paid-in-capital.

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Stock Options

The following table sets forth a summary of stock options under all plans for the three months ended March 31, 2013:

				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
		Exercise		Contractual Term	Value (in
	Total Options	Price		(in years)	thousands)
Outstanding at December 31, 2012	3,159,542	$	18.96
Granted	10,017	42.19
Exercised	(449,872)	9.34
Forfeited	(16,667)	27.74
Outstanding at March 31, 2013	2,703,020	$	20.60	6.1	$	50,527
Exercisable at March 31, 2013	896,748	$	14.66	5.9	$	22,079

The weighted average fair value of options granted during the three months ended March 31, 2013 and 2012 was $12.97 and $9.89, respectively. Fair value of options vested during the three months ended March 31, 2013 and 2012 was $1.0 million and $1.7 million, respectively.

The Black Scholes model utilizes the following assumptions in determining a fair value: price of underlying stock, award exercise price, expected term, risk-free interest rate, expected dividend yield and expected stock price volatility over the award’s expected term. Due to the utilization of these assumptions, the existing models do not necessarily represent the definitive fair value of awards for future periods. As the IPO occurred during the second quarter of 2011, the option term has been estimated by considering both the vesting period, which typically for both plans has been four or five years, and the contractual term, which historically has been either seven or ten years. Prior to the IPO, the fair value of the Class A common stock was estimated based upon the net enterprise value of the Company, discounted to reflect the lack of liquidity and control associated with the stock.  Since the consummation of the IPO, the fair value of the Class A common stock has been based upon the closing price of the Class A common stock as reported on the New York Stock Exchange. Volatility is estimated based upon it’s the current peer group average utilized by the Company.

The assumptions used in the Company’s Black Scholes valuation related to stock option grants made during the three months ended March 31, 2013 were as follows:

Dividend yield	1.4%
Expected option life	4.8 years
Volatility factor percentage of market price	40.1%
Discount rate	0.9%

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Restricted Stock Awards

The following table sets forth a summary of restricted stock awards granted under the 2011 Stock Plan and related information for the three months ended March 31, 2013:

		Weighted
		Average
	Restricted	Grant-Date
	Stock	Fair Value
Outstanding at December 31, 2012	123,941	$	24.24
Granted	5,526	40.64
Forfeited	(2,225)	29.06
Outstanding at March 31, 2013	127,242	$	24.87

No restricted stock awards vested during the three months ended March 31, 2013.

Restricted Stock Units – Time Vesting and Performance Vesting

Under the 2011 Stock Plan, the Company granted time vesting and performance vesting restricted stock units. Time vesting restricted stock units vest over a period of three years. Performance vesting restricted stock units vest based on the passage of time and the achievement of certain criteria; based on the extent to which the targets are achieved, vested shares may range from 0% to 200% of the original share amount. The unrecognized compensation cost related to the performance vesting restricted stock units is adjusted as necessary to reflect changes in the probability that the vesting criteria will be achieved.

The following table sets forth a summary of restricted stock units and performance stock units granted under the 2011 Stock Plan and related information for the three months ended March 31, 2013:

	Time	Weighted		Performance	Weighted
	Vesting	Average		Vesting	Average
	Restricted	Grant-Date		Restricted	Grant-Date
	Stock Units	Fair Value		Stock Units	Fair Value
Outstanding at December 31, 2012	171,937	$	36.16	-	$	-
Granted	7,622	41.52		45,327	42.19
Outstanding at March 31, 2013	179,559	$	36.39	45,327	$	42.19

No time vesting or performance vesting shares vested during the three months ended March 31, 2013.

NOTE 9.  SEGMENTS

The Company has three reportable segments, each of which represents an identifiable component of the Company for which separate financial information is available. This information is utilized by management to assess performance and allocate assets accordingly. The Company’s management evaluates segment operating results based on several indicators. The primary key performance indicators are sales and operating income or loss for each segment. Operating income or loss, as evaluated by management, excludes certain items that are managed at the consolidated level, such as distribution and warehousing, impairments and other corporate costs. The Retail reportable segment includes the Company’s corporate store operations in the United States, Canada and Puerto Rico and its GNC.com and LuckyVitamin.com businesses. The Franchise reportable segment represents the Company’s franchise operations, both domestically and internationally. The Manufacturing/Wholesale reportable segment represents the Company’s manufacturing operations in South Carolina and the Wholesale sales business. This segment supplies the Retail and Franchise segments, along with various third parties, with finished products for sale. The Warehousing and Distribution and Corporate costs represent the Company’s administrative expenses. The accounting policies of the segments are the same as those described in the “Basis of Presentation and Summary of Significant Accounting Policies.”

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The following table represents key financial information of the Company’s segments:

	Three months ended March 31,
	2013		2012
	(unaudited)
	(in thousands)
Revenue:
Retail	$	493,467	$	469,821
Franchise	107,887		101,484
Manufacturing/Wholesale:
Intersegment revenues	65,470		66,508
Third Party	63,337		52,967
Subtotal Manufacturing/Wholesale	128,807		119,475
Subtotal segment revenues	730,161		690,780
Elimination of intersegment revenues	(65,470)		(66,508)
Total revenue	$	664,691	$	624,272
Operating income:
Retail	$	98,583	$	93,176
Franchise	38,425		34,428
Manufacturing/Wholesale	22,926		22,837
Unallocated corporate and other costs:
Warehousing and distribution costs	(16,355)		(15,795)
Corporate costs	(19,059)		(21,891)
Transaction related costs	-		(686)
Subtotal unallocated corporate and other costs	(35,414)		(38,372)
Total operating income	$	124,520	$	112,069

NOTE 10.  INCOME TAXES

The Company recognized $40.9 million of income tax expense (or 36.0% of pre-tax income) during the three months ended March 31, 2013 compared to $37.8 million (or 37.2% of pre-tax income) for the same period in 2012.

The Company files a consolidated U.S. federal tax return and various consolidated and separate tax returns as prescribed by the tax laws of the state, local and international jurisdictions in which it operates. The Company’s 2010 federal income tax return is currently under examination by the Internal Revenue Service. The Company has various state and local jurisdiction tax years open to examination (the earliest open period is 2004), and the Company also has certain state and local jurisdictions currently under audit. As of March 31, 2013, the Company believes that it has appropriately reserved for potential federal and state income tax exposures.

At both March 31, 2013 and December 31, 2012, the Company had $12.9 million of unrecognized tax benefits. As of March 31, 2013, the Company is not aware of any tax positions for which it is reasonably possible that the amounts of unrecognized tax benefits will significantly increase or decrease within the next 12 months. The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is approximately $12.9 million. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company had accrued approximately $5.7 million at both March 31, 2013 and December 31, 2012 for potential interest and penalties associated with uncertain tax positions. To the extent interest and penalties are not assessed with respect to the ultimate settlement of uncertain tax positions, amounts previously accrued will be reduced and reflected as a reduction of the overall income tax provision.

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NOTE 11. RELATED PARTY TRANSACTIONS

Sponsors. Prior to the IPO, Holdings’ outstanding common stock was principally owned by the Sponsors. On March 19, 2012, OTPP converted all of its shares of Class B common stock into an equal number of shares of Class A common stock. As of December 31, 2012 Ares does not own any shares of the Company’s capital stock and OTPP owns less than 10,000 shares of the Company’s Class A common stock, and therefore the Sponsors are no longer considered related parties.

Lease Agreements. General Nutrition Centres Company, the Company’s wholly owned subsidiary, is a party, as lessee, to 16 lease agreements with Cadillac Fairview Corporation (“Cadillac Fairview”), as lessor, and 1 lease agreement with Ontrea, Inc. (“Ontrea”), as lessor, with respect to properties located in Canada.  Each of Cadillac Fairview and Ontrea is a direct wholly owned subsidiary of OTPP. For the three months ended March 31, 2012, the Company paid $0.7 million under the lease agreements with Cadillac Fairview, and an immaterial amount for the three months ended March 31, 2012 under the lease agreement with Ontrea. Each lease was negotiated in the ordinary course of business on an arm’s length basis.

NOTE 12. SUBSEQUENT EVENTS

On April 26, 2013, the board of directors authorized and declared a cash dividend for the second quarter of 2013 of $0.15 per share of Class A common stock, payable on or about June 28, 2013 to stockholders of record as of the close of business on June 14, 2013.

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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with Item 1, “Financial Statements” in Part I of this Quarterly Report on Form 10-Q.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and any documents incorporated by reference herein or therein include forward-looking statements within the meaning of federal securities laws.  Forward-looking statements include statements that may relate to our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs and other information that is not historical information.  Forward-looking statements can often be identified by the use of terminology such as “subject to,” “believe,” “anticipate,” “plan,” “potential,” “predict,” “expect,” “intend,” “estimate,” “project,” “may,” “will,” “should,” “would,” “continue,” “seek,” “could,” “can,” “think,” the negatives thereof, variations thereon and similar expressions, or by discussions of strategy.

All forward-looking statements, including, without limitation, our examination of historical operating trends, are based upon our current expectations and various assumptions. We believe there is a reasonable basis for our expectations and beliefs, but they are inherently uncertain. We may not realize our expectations, and our beliefs may not prove correct. Actual results could differ materially from those described or implied by such forward-looking statements. The following uncertainties and factors, among others (including, but not limited to, those we describe under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012), could affect future performance and cause actual results to differ materially from those matters expressed in or implied by forward-looking statements:

·significant competition in our industry;

·unfavorable publicity or consumer perception of our products;

·increases in the cost of borrowings and limitations on availability of additional debt or equity capital;

·our debt levels and restrictions in our debt agreements;

·incurrence of material product liability and product recall costs;

·loss or retirement of key members of management;

·costs of compliance and our failure to comply with new and existing governmental regulations governing our products, including, but not limited to, proposed dietary supplement legislation and regulations;

·changes in our tax obligations;

·costs of litigation and the failure to successfully defend lawsuits and other claims against us;

·failure of our franchisees to conduct their operations profitably and limitations on our ability to terminate or replace under-performing franchisees;

·economic, political and other risks associated with our international operations;

·failure to keep pace with the demands of our customers for new products and services;

·disruptions in our manufacturing system or losses of manufacturing certifications;

·disruptions in our distribution network;

·lack of long-term experience with human consumption of ingredients in some of our products;

·increases in the frequency and severity of insurance claims, particularly claims for which we are self-insured;

·failure to adequately protect or enforce our intellectual property rights against competitors;

·changes in raw material costs and pricing of our products;

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·failure to successfully execute our growth strategy, including any delays in our planned future growth, any inability to expand our franchise operations or attract new franchisees, any inability to expand our company-owned retail operations, any inability to grow our international footprint, or any inability to expand our e-commerce business;

·changes in applicable laws relating to our franchise operations;

·damage or interruption to our information systems;

·risks and costs associated with data loss, credit card fraud and identity theft;

·impact of current economic conditions on our business;

·natural disasters, unusually adverse weather conditions, pandemic outbreaks, boycotts and geo-political events; and

·failure to maintain effective internal controls.

Consequently, forward-looking statements should be regarded solely as our current plans, estimates and beliefs. You should not place undue reliance on forward-looking statements. We cannot guarantee future results, events, levels of activity, performance or achievements. We do not undertake and specifically decline any obligation to update, republish or revise forward-looking statements to reflect future events or circumstances or to reflect the occurrences of unanticipated events.

Business Overview

We are a global specialty retailer of health and wellness products. We derive our revenues principally from product sales through our company-owned stores and online through GNC.com and LuckyVitamin.com, domestic and international franchise activities and sales of products manufactured in our facilities to third parties. We sell products through a worldwide network of more than 8,200 locations operating under the GNC brand name.

In April 2011, we consummated an initial public offering (the “IPO”) of 25.9 million shares of Holdings Class A common stock, par value $0.001 per share (the “Class A common stock”), at an IPO price of $16.00 per share.  Subsequent to the IPO, certain of Holdings’ stockholders completed the following registered offerings of Class A common stock:

·in October 2011, 23.0 million shares at $24.75 per share;

·in March 2012, 19.6 million shares at $33.50 per share;

·in August 2012, 10.0 million shares at $38.42 per share; and

·In November 2012, 11.7 million shares at $35.20 per share.

In conjunction with the August 2012 offering, we repurchased an additional six million shares of Class A common stock from one of our stockholders as part of a share repurchase program.

As of March 31, 2013, we have completed $61.3 million of the February 2013 approved $250.0 million share repurchase program of Class A common stock.

In March 2011, GNC Corporate and General Nutrition Centers, Inc., each a wholly owned subsidiary of Holdings’, entered into a Credit Agreement (the “Credit Agreement”) that provided for a $1.2 billion term loan (the “Term Loan Facility”) and an $80.0 million revolving credit facility (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Senior Credit Facility”). On August 1, 2012, the Credit Agreement was amended to increase the outstanding borrowings by $200.0 million (the “Incremental Term Loan”).  In October 2012, the Credit Agreement was amended to adjust the per annum interest rate to the greater of LIBOR and 1.00%, plus an applicable margin of 2.75% (the “Repricing”).

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Executive Overview

In 2013, we have continued to focus on achieving our five principal corporate goals: growing company-owned domestic retail earnings, growing company-owned domestic retail square footage, growing our international footprint, expanding our e-commerce business and further leveraging the GNC brand. These goals are designed to drive both short-term and long-term financial results. Our efforts led to the following results for the three months ended March 31, 2013 compared to the same period in 2012:

·Our company-owned domestic same store sales increased by 1.9%, which includes an 18.8% increase from our GNC.com business.

·We increased our company-owned domestic store count by 32 net new stores during the first quarter of 2013.

·Our retail segment sales increased by 5.0%, and operating income increased 5.8%.

·Total franchising revenue grew 6.3%, and operating income increased 11.6%.

·Domestic franchising revenue grew 4.2%, and we added 9 net new domestic franchise stores during the first quarter of 2013.

·International franchise revenue grew 9.9%, and we added 31 net new international franchise stores during the first quarter of 2013.

·We increased our sales in our wholesale/manufacturing segment by 19.6% through our wholesale distribution channels and increased third-party sales.

·We generated 6.5% of total revenue growth which drove an 11.1% increase in total operating income.

·In April 2013, the Company announced the planned second quarter expansion of its Gold Card Member Pricing program to all stores nationwide and GNC.com, which evolves Gold Card from a fixed 20% discount the first week of each month to an everyday variable discount Member pricing model.

·We generated net cash from operating activities of $95.5 million, repurchased $61.3 million in common stock, and paid $14.7 million in common stock dividends.

·We launched our “Respect Yourself” marketing campaign to increase our brand awareness and expand our message across demographics.  This integrated campaign spans our stores, digital, social, direct, print and outdoor media, and a national television campaign.

Revenues and Operating Performance from our Segments

We measure our operating performance primarily through revenues and operating income from our three segments, Retail, Franchise and Manufacturing/Wholesale, and through the management of unallocated costs from our warehousing, distribution and corporate segments, as follows:

·Retail: Retail revenues are generated by sales to consumers at our company-owned stores and online through our websites, GNC.com and LuckyVitamin.com. Although we believe that our retail and franchise businesses are not seasonal in nature, historically we have experienced, and expect to continue to experience, a variation in our net sales and operating results from quarter to quarter. Our industry is expected to grow at an annual average rate of approximately 6.5% through 2020. As a leader in our industry, we expect our organic retail revenue to grow faster than the projected industry growth as a result of our disproportionate market share, scale economies in purchasing and advertising, strong brand awareness and vertical integration.

·Franchise: Franchise revenues are generated primarily by:

(1)product sales to our franchisees;

(2)royalties on franchise retail sales; and

(3)franchise fees, which we charge for initial franchise awards, renewals and transfers of franchises.

Although we do not anticipate the number of our domestic franchise stores to grow substantially, we expect to achieve domestic franchise store revenue growth consistent with projected industry growth, which we expect to generate from royalties on franchise retail sales and product sales to our existing franchisees. As a result of our efforts to expand our international presence and provisions in our international franchising agreements requiring franchisees to open additional stores, we have increased our international store base in recent periods and expect to continue to increase the number of our international franchise stores over the next five years. We believe this will result in additional franchise fees associated with new store openings and increased revenues from product sales to, and royalties from, new franchisees. Since our international franchisees pay royalties to us in U.S. dollars, any strengthening of the U.S. dollar relative to our franchisees’ local currency may offset some of the growth in royalty revenue.

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·Manufacturing/Wholesale: Manufacturing/Wholesale revenues are generated by: sales of manufactured products to third parties, generally for third-party private label brands; the sale of our proprietary and third-party products to and through Rite Aid and www.drugstore.com; and the sale of our proprietary products to PetSmart and Sam’s Club. We also record license fee revenue from the opening of franchise store-within-a-store locations within Rite Aid stores. Our revenues generated by our manufacturing and wholesale operations are subject to our available manufacturing capacity.

A significant portion of our business infrastructure is comprised of fixed operating costs. Our vertically integrated distribution network and manufacturing capacity can support higher sales volume without significant incremental costs. We therefore expect our operating expenses to grow at a lesser rate than our revenues, resulting in positive operating leverage.

The following trends and uncertainties in our industry could affect our operating performance as follows:

·broader consumer awareness of health and wellness issues and rising healthcare costs may increase the use of the products we offer and positively affect our operating performance;

·interest in, and demand for, condition-specific products based on scientific research may positively affect our operating performance if we can timely develop and offer such condition-specific products;

·the effects of favorable and unfavorable publicity on consumer demand with respect to the products we offer may have similarly favorable or unfavorable effects on our operating performance;

·a lack of long-term experience with human consumption of ingredients in some of our products could create uncertainties with respect to the health risks, if any, related to the consumption of such ingredients and negatively affect our operating performance;

·increased costs associated with complying with new and existing governmental regulation may negatively affect our operating performance; and

·a decline in disposable income available to consumers may lead to a reduction in consumer spending and negatively affect our operating performance.

Results of Operations

The following information presented for the three months ended March 31, 2013 and 2012 was prepared by management, is unaudited and was derived from our unaudited consolidated financial statements and accompanying notes. In the opinion of management, all adjustments necessary for a fair statement of our financial position and operating results for such periods and as of such dates have been included.

As discussed in Note 9, “Segments,” to our unaudited consolidated financial statements, we evaluate segment operating results based on several indicators. The primary key performance indicators are revenues and operating income or loss for each segment. Revenues and operating income or loss, as evaluated by management, exclude certain items that are managed at the consolidated level, such as warehousing and transportation costs, impairments and other corporate costs. The following discussion compares the revenues and the operating income or loss by segment, as well as those items excluded from the segment totals.

Same store sales growth reflects the percentage change in same store sales in the period presented compared to the prior year period. Same store sales are calculated on a daily basis for each store and exclude the net sales of a store for any period if the store was not open during the same period of the prior year. We also include internet sales, as generated only through GNC.com and www.drugstore.com, in our domestic retail company-owned domestic same store sales calculation. When a store’s square footage has been changed as a result of reconfiguration or relocation in the same mall or shopping center, the store continues to be treated as a same store. If, during the period presented, a store was closed, relocated to a different mall or shopping center, or converted to a franchise store or a company-owned store, sales from that store up to and including the closing day or the day immediately preceding the relocation or conversion are included as same store sales as long as the store was open during the same period of the prior year. We exclude from the calculation sales during the period presented that occurred on or after the date of relocation to a different mall or shopping center or the date of a conversion.

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Results of Operations

(Dollars in millions and percentages expressed as a percentage of total net revenue)

	Three Months Ended March 31,
	2013			2012
	(unaudited)
Revenues:
Retail	$	493.5	74.3%	$	469.8	75.2%
Franchise	107.9		16.2%	101.5		16.3%
Manufacturing / Wholesale	63.3		9.5%	53.0		8.5%
Total net revenues	664.7		100.0%	624.3		100.0%
Operating expenses:
Cost of sales, including warehousing, distribution and occupancy costs	408.6		61.5%	383.6		61.4%
Compensation and related benefits	79.5		12.0%	80.0		12.8%
Advertising and promotion	20.4		3.1%	16.2		2.6%
Other selling, general and administrative expenses	29.6		4.4%	29.6		4.7%
Transaction related costs	-		0.0%	0.7		0.1%
Amortization expense	2.1		0.3%	2.2		0.4%
Foreign currency gain	-		0.0%	(0.1)		0.0%
Total operating expenses	540.2		81.3%	512.2		82.0%
Operating income:
Retail	98.6		14.8%	93.2		14.9%
Franchise	38.4		5.8%	34.5		5.5%
Manufacturing / Wholesale	22.9		3.4%	22.8		3.7%
Unallocated corporate and other costs:
Warehousing and distribution costs	(16.4)		-2.5%	(15.8)		-2.5%
Corporate costs	(19.0)		-2.8%	(21.9)		-3.5%
Transaction related costs	-		0.0%	(0.7)		-0.1%
Subtotal unallocated corporate and other costs, net	(35.4)		-5.3%	(38.4)		-6.1%
Total operating income	124.5		18.7%	112.1		18.0%
Interest expense, net	11.0			10.4
Income before income taxes	113.5			101.7
Income tax expense	40.9			37.8
Net income	$	72.6		$	63.9

Note: The numbers in the above table have been rounded to millions.  All calculations related to the Results of Operations for the year-over-year comparisons were derived from unrounded data and could occasionally differ immaterially if you were to use the table above for these calculations.

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Comparison of the Three Months Ended March 31, 2013 and 2012

Revenues

Our consolidated net revenues increased $40.4 million, or 6.5%, to $664.7 million for the three months ended March 31, 2013 compared to $624.3 million for the same period in 2012. The increase was the result of increased sales in each of our segments.

Retail.  Revenue in our Retail segment increased $23.7 million, or 5.0%, to $493.5 million for the three months ended March 31, 2013 compared to $469.8 million for the same period in 2012.  Domestic retail revenue increased $18.6 million due to the opening of new stores and a 1.9% increase in our same store sales driven by sales increases in the sports nutrition category and an increase in sales from GNC.com of $4.7 million, or 17.4%, to $31.7 million for the three months ended March 31, 2013, compared to $27.0 million for the same period in 2012. In addition, sales from LuckyVitamin.com contributed $1.1 million to the increase in revenue. Canadian sales increased by $3.9 million in U.S. dollars for the three months ended March 31, 2013 compared to the same period in 2012. Our company-owned store base increased by 139 domestic stores to 3,053 at March 31, 2013 compared to 2,914 at March 31, 2012, due to new store openings and franchise store acquisitions. Our Canadian store base increased by 2 stores to 167 at March 31, 2013 compared to 165 at March 31, 2012.

Franchise. Revenues in our Franchise segment increased $6.4 million, or 6.3%, to $107.9 million for the three months ended March 31, 2013 compared to $101.5 million for the same period in 2012. Domestic franchise revenues increased $2.7 million primarily due to higher product sales, royalties and fees. Our domestic franchise same store sales increased by 3.2% for the three months ended March 31, 2013 compared to the same period in 2012. There were 958 domestic franchise stores at March 31, 2013 compared to 928 stores at March 31, 2012.  International revenue increased by $3.7 million, or 9.9%, for the three months ended March 31, 2013, compared the same period in 2012, primarily as a result of higher product sales, royalties and fees. Our international franchise store base increased by 237 stores to 1,861 at March 31, 2013 compared to 1,624 at March 31, 2012.

Manufacturing/Wholesale. Revenues in our Manufacturing/Wholesale segment, which includes third-party sales from our manufacturing facilities in South Carolina, as well as wholesale sales to Rite Aid, PetSmart, Sam’s Club, and www.drugstore.com, increased $10.3 million, or 19.6%, to $63.3 million for the three months ended March 31, 2013 compared to $53.0 million for the same period in 2012. For the three months ended March 31, 2013, third-party contract manufacturing sales from our South Carolina manufacturing plant increased by $3.5 million, or 11.2%, compared to the same period in 2012. In addition, wholesale revenue increased due to timing of purchase orders and shipments with key wholesale customers.

Cost of Sales

Cost of sales, which includes product costs, costs of warehousing and distribution and occupancy costs, increased $25.0 million, or 6.5%, to $408.6 million for the three months ended March 31, 2013 compared to $383.6 million for the same period in 2012. Cost of sales, as a percentage of net revenue, was 61.5% and 61.4% for the three months ended March 31, 2013 and 2012, respectively.

Selling, General and Administrative (“SG&A”) Expenses

SG&A expenses, including compensation and related benefits, advertising and promotion expense, other SG&A expenses including amortization expense and transaction related costs, increased $2.9 million, or 2.3%, to $131.6 million for the three months ended March 31, 2013 compared to $128.7 million for the same period in 2012. These expenses, as a percentage of net revenue, were 19.8% for the three months ended March 31, 2013 compared to 20.6% for the three months ended March 31, 2012.

Compensation and related benefits. Compensation and related benefits decreased $0.5 million, or -0.6%, to $79.5 million for the three months ended March 31, 2013 compared to $80.0 million for the same period in 2012. The decrease in compensation and related benefits was primarily due to a decrease in store and corporate incentives, partially offset by an increase to support our increased store base and sales volume.

Advertising and promotion. Advertising and promotion expenses increased $4.2 million, or 26.0%, to $20.4 million for the three months ended March 31, 2013 compared to $16.2 million for the same period in 2012. The increase in advertising expense resulted primarily from an increase in media expense with the launch of the “Respect Yourself” campaign.

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Other SG&A. Other SG&A expenses, including amortization expense, decreased $0.1 million, or -0.3%, to $31.7 million for the three months ended March 31, 2013 compared to $31.8 million for the same period in 2012.

Transaction related costs. We did not incur any transaction related costs for the three months ended March 31, 2013. For the three months ended March 31, 2012, we incurred $0.7 million of expenses related to the March 2012 offering.

Operating Income

As a result of the foregoing, consolidated operating income increased $12.5 million, or 11.1%, to $124.5 million for the three months ended March 31, 2013 compared to $112.1 million for the same period in 2012. Operating income, as a percentage of net revenue, was 18.7% and 18.0% for the three months ended March 31, 2013 and 2012, respectively.

Retail. Operating income increased $5.4 million, or 5.8%, to $98.6 million for the three months ended March 31, 2013 compared to $93.2 million for the same period in 2012. The increase in operating income was driven by higher gross profit margin and expense leverage on the same store sales increase in payroll, partially offset by a planned increase in marketing spend this quarter in support of the “Respect Yourself” marketing campaign launch.

Franchise. Operating income increased $4.0 million, or 11.6%, to $38.4 million for the three months ended March 31, 2013 compared to $34.5 million for the same period in 2012. The increase was due to increased wholesale product sales and royalty income.

Manufacturing/Wholesale. Operating income increased $0.1 million, or 0.4%, to $22.9 million for the three months ended March 31, 2013 compared to $22.8 million for the same period in 2012.  Operating income grew slower than sales due to a lower mix of proprietary product sales.

Warehousing and distribution costs. Unallocated warehousing and distribution costs increased $0.6 million, or 3.5%, to $16.4 million for the three months ended March 31, 2013 compared to $15.8 million for the same period in 2012. The increase was primarily due to higher fuel costs and increased wages to support higher sales volume.

Corporate costs. Corporate overhead costs decreased $2.8 million, or -12.9%, to $19.0 million for the three months ended March 31, 2013 compared to $21.9 million for the same period in 2012. This decrease was due to decreases in compensation expenses and other SG&A costs.

Transaction related costs. We did not incur any transaction related costs for the three months ended March 31, 2013. For the three months ended March 31, 2012, we incurred $0.7 million of expenses related to the March 2012 offering.

Interest Expense

Interest expense increased $0.6 million, or 6.1%, to $11.0 million for the three months ended March 31, 2013 compared to $10.4 million for the same period in 2012. This increase was primarily due to the borrowings under the $200.0 million Incremental Term Loan, partially offset by the effects of the Repricing.

Income Tax Expense

We recognized $40.9 million of income tax expense (or 36.0% of pre-tax income) during the three months ended March 31, 2013 compared to $37.8 million (or 37.2% of pre-tax income) for the same period in 2012.  The income tax rate was lower for the three months ended March 31, 2013 compared to the same period in 2012 as a result of benefit of the American Taxpayer Relief Act of 2012 enacted on January 2, 2013 and non-deductible transaction related costs in 2012.

Net Income

As a result of the foregoing, consolidated net income increased $8.7 million to $72.6 million for the three months ended March 31, 2013 compared to $63.9 million for the same period in 2012.

Liquidity and Capital Resources

At March 31, 2013, we had $176.2 million in cash and cash equivalents and $581.9 million in working capital, compared with $158.5 million in cash and cash equivalents and $573.5 million in working capital at December 31, 2012. The $8.4 million increase in our working capital was primarily driven by an increase in our receivables and inventory levels due to an increase in volume, partially offset by an increase in accounts payable.

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We expect to fund our operations through internally generated cash and, if necessary, from borrowings under the Revolving Credit Facility.  At March 31, 2013, we had $78.9 million available under the Revolving Credit Facility, after giving effect to $1.1 million utilized to secure letters of credit.

We expect our primary uses of cash in the near future will be for capital expenditures, working capital requirements, and funding any quarterly dividends to stockholders and share repurchases that are approved by the board of directors.

On February 14, 2013, the board of directors authorized a program to repurchase up to an aggregate of $250.0 million of our Class A common stock. We repurchased $61.3 million of Class A common stock during the first quarter of 2013.

On April 26, 2013, the board of directors authorized and declared a cash dividend for the second quarter of 2013 of $0.15 per share of Class A common stock, payable on or about June 28, 2013 to stockholders of record as of the close of business on June 14, 2013.

We currently anticipate that cash generated from operations, together with amounts available under the Revolving Credit Facility, will be sufficient for the term of the Revolving Credit Facility, which matures on March 15, 2016, to meet our operating expenses and fund capital expenditures. Under the Incremental Term Loan, we are required to make quarterly payments of $0.5 million, payable every quarter beginning September 30, 2012 and ending on December 31, 2017. Our ability to make scheduled payments of principal on, to pay interest on or to refinance our debt and to satisfy our other debt obligations will 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 Senior Credit Facility and expect to remain in compliance throughout 2013.

Cash Provided by Operating Activities

Cash provided by operating activities was $95.5 million and $70.7 million for the three months ended March 31, 2013 and 2012, respectively. The increase was due to an increase in net income of $8.7 million and the timing of payments for inventory, accounts payable, and accounts receivable for the three months ended March 31, 2013 compared to the same period in 2012.

For the three months ended March 31, 2013, inventory increased $23.1 million as a result of increases in our finished goods to support our increased sales. Accounts receivables increased $9.4 million as a result of increased sales to our franchisees. Accounts payable increased $13.3 million due to the increase in inventory and timing of payments. Deferred revenue and other current liabilities increased $27.6 million due to an increase in accrued taxes.

Cash Used in Investing Activities

Cash used in investing activities was $10.6 million for both the three months ended March 31, 2013 and 2012. Capital expenditures, which were primarily for new stores and improvements to our retail stores and our South Carolina manufacturing facility, were $9.9 million and $9.2 million for the three months ended March 31, 2013 and 2012, respectively.

Our capital expenditures typically consist of new stores, certain periodic updates in our company-owned stores and ongoing upgrades and improvements to our manufacturing facilities and information technology systems.

We expect capital expenditures to be approximately $50 million in 2013, which includes costs associated with growing our domestic square footage.  We anticipate funding our 2013 capital requirements with cash flows from operations and, if necessary, borrowings under the Revolving Credit Facility.

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Cash Used in Financing Activities

For the three months ended March 31, 2013, cash used in financing activities was $67.6 million, primarily consisting of dividends paid to Holdings’ stockholders of $14.7 million and the repurchase of an aggregate of $61.3 million shares of Class A common stock under the repurchase program, offset by $9.4 million of proceeds from exercised stock options, including the associated tax benefit.

For the three months ended March 31, 2012, cash provided by financing activities was $13.3 million, primarily due to $33.6 million of proceeds from exercised stock options, including the associated tax benefit, offset partially by dividends paid to stockholders of $11.5 million and the repurchase of stock under a repurchase program of $5.9 million.

Contractual Obligations

There are no material changes in our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2012.

Off Balance Sheet Arrangements

As of March 31, 2013, we had no relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off balance sheet arrangements, or other contractually narrow or limited purposes. We are, therefore, not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Critical Accounting Estimates

Our significant accounting policies are described in the notes to our unaudited consolidated financial statements under Note 2, “Basis of Presentation and Summary of Significant Accounting Policies”. There have been no material changes to the application of critical accounting policies and significant judgments and estimates since those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2012.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (the “FASB”) issued an accounting standard regarding the reclassification of amounts out of accumulated other comprehensive income (“AOCI”).  This standard does not change the current requirements for reporting net income or other comprehensive income. However, the standard requires disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement of operations or in the footnotes to the financial statements. Amounts that are not required to be reclassified in their entirety to net income must be cross-referenced to other disclosures that provide additional detail. This guidance is effective for fiscal years beginning after December 15, 2012. We adopted this guidance during the first quarter of 2013. The adoption of this guidance had no material impact on our consolidated financial statements.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Market risk represents the risk of changes in the value of market risk sensitive instruments caused by fluctuations in interest rates, 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 connection with these commodity market risks.

Interest Rate Market Risk

All of Centers’ long-term debt is subject to changing interest rates.  Although changes in interest rates do not impact our operating income, the changes could affect the fair value of such debt and related interest payments.  Based on our variable rate debt balance as of March 31, 2013, an increase of 1% in the interest rates would cause our annual interest rate costs to increase by approximately $2.2 million.  A decrease in the current interest rates would have no impact on interest expense due to an interest rate floor that exists on the Senior Credit Facility.

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Foreign Currency Exchange Rate Market Risk

We are subject to the risk of foreign currency exchange rate changes in the conversion 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. The primary currencies to which we are exposed to fluctuations are the Canadian Dollar and the Chinese Renminbi. The fair value of our net foreign investments and our foreign denominated payables would not be materially affected by a 10% adverse change in foreign currency exchange rates for the three months ended March 31, 2013 and 2012.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Disclosure controls and procedures are designed to provide reasonable assurance that the information 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 and CFO, as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our CEO and CFO have concluded that, as of March 31, 2013, our disclosure controls and procedures are effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal controls over financial reporting that occurred during the last fiscal quarter, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

25

Part II - OTHER INFORMATION

Item 1.   Legal Proceedings

We are engaged in various legal actions, claims and proceedings resulting from the Company’s business activities arising in the normal course of business, including claims related to breach of contracts, products liabilities, intellectual property matters and employment-related matters. As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. We continue to assess the requirement to account for additional contingencies in accordance with the standard on contingencies. If we are required to make a payment in connection with an adverse outcome in these matters, it could have a material adverse effect on our business, financial condition, results of operations or cash flows.

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 these claims to date have not been material to us, it is possible that current and future product liability claims could have a material adverse effect on our business, financial condition, results of operations or cash flows. We currently maintain product liability insurance with a deductible/retention of $4.0 million per claim with an aggregate cap on retained loss of $10.0 million. We typically seek and have obtained contractual indemnification from most parties that supply raw materials for our products or that manufacture or market products we sell. We also typically seek to be added, and have been added, as an additional insured under most of such parties’ insurance policies. We are also entitled to indemnification by Numico for certain losses arising from claims related to products containing ephedra or Kava Kava sold prior to December 5, 2003. However, any such indemnification or insurance is limited by its terms and any such indemnification, as a practical matter, is limited to the creditworthiness of the indemnifying party and its insurer, and the absence of significant defenses by the insurers. We may incur material products liability claims, which could increase our costs and adversely affect our reputation, revenue and operating income.

Hydroxycut Claims. On May 1, 2009, the Food and Drug Administration (“FDA”) issued a warning on several Hydroxycut-branded products manufactured by Iovate. The FDA warning was based on 23 reports of liver injuries from consumers who claimed to have used the products between 2002 and 2009. As a result, Iovate voluntarily recalled 14 Hydroxycut-branded products.

Following the recall, the Company was named, among other defendants, in approximately 93 lawsuits related to Hydroxycut-branded products in 14 states. Iovate previously accepted our tender request for defense and indemnification under its purchasing agreement with us and, as such, Iovate has accepted our request for defense and indemnification in the Hydroxycut matters. Our ability to obtain full recovery in respect to any claims against us in connection with products manufactured by Iovate under the indemnity is dependent on Iovate’s insurance coverage, the creditworthiness of its insurer, and the absence of significant defenses by such insurer. To the extent the Company is not fully compensated by Iovate’s insurer, we can seek recovery directly from Iovate. Our ability to fully recover such amounts may be limited by the creditworthiness of Iovate.

During the three months ended March 31, 2013, we were not named in any new personal injury lawsuits related to Hydroxycut.  As of March 31, 2013, there were 73 pending lawsuits related to Hydroxycut in which the Company has been named: 67 individual, largely personal injury claims and six putative class action cases, generally inclusive of claims of consumer fraud, misrepresentation, strict liability and breach of warranty.  In 2009, the United States Judicial Panel on Multidistrict Litigation consolidated pretrial proceedings of many of the pending actions in the Southern District of California (In re: Hydroxycut Marketing and Sales Practices Litigation, MDL No. 2087). The parties in the consolidated class actions have reached a settlement, and the settlement has been preliminarily approved by the Court.  The parties’ motion for final approval of the settlement was heard on April 23, 2013.  The Company is not required to make any payments under the settlement.

Item 1A.   Risk Factors

There have been no material changes to the disclosures relating to this item from those set forth in our Annual Report on Form 10-K for the year ended December 31, 2012.

26

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table sets forth information regarding Holdings’ purchases of shares of Class A common stock during the quarter ended March 31, 2013:

							Maximum Number (or
							Approximate Dollar
					Total Number of		Value) of Shares that
			Average		Shares Purchased as		May Yet Be Purchased
	Total Number of		Price Paid		Part of Publicly		under the Plans or
	Shares Purchased (1)		per Share		Announced Plans		Programs
January 1 to January 31, 2013		-		-		-	-
February 1 to February 28, 2013		954,488		40.44		954,488	$  211,404,070
March 1 to March 31, 2013		550,000		41.30		550,000	$  188,690,297
Total		1,504,488		$ 40.75		1,504,488

(1)On February 14, 2013, we announced that our board of directors  approved  a share repurchase program pursuant to which we were authorized to purchase up to an aggregate of $250.0 million shares of Class A common stock during the twelve month period ending February 28, 2014 (the “Repurchase Program”). Other than purchases in connection with the Repurchase Program as set forth in the table above, we made no purchases of shares of Class A common stock for the quarter ended March 31, 2013.

Item 3.   Defaults Upon Senior Securities

None.

Item 4.   Mine Safety Disclosures

Item 4 is not applicable.

Item 5.  Other Information

None.

Item 6.  Exhibits

Exhibit
No.	Description
10.1	GNC Holdings, Inc. Directors’ Non-Qualified Deferred Compensation Plan Effective as of January 1, 2013*
10.2	Form of Director Restricted Stock Unit Award Agreement*
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
*	Management contract or compensatory plan or arrangement of the Company required to be filed as an exhibit.

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the persons undersigned thereunto duly authorized.

	GNC HOLDINGS, INC.
	(Registrant)
	/s/ Joseph M. Fortunato
Date: May 2, 2013	Joseph M. Fortunato
	President and Chief Executive Officer
	(Principal Executive Officer)
	/s/ Michael M. Nuzzo
Date: May 2, 2013	Michael M. Nuzzo
	Chief Financial Officer
	(Principal Financial Officer)
	/s/ Andrew S. Drexler
Date: May 2, 2013	Andrew S. Drexler
	Corporate Controller
	(Principal Accounting Officer)

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EX-10.1

Exhibit 10.1

GNC HOLDINGS, INC.
DIRECTORS’ NON-QUALIFIED

DEFERRED COMPENSATION PLAN

EFFECTIVE AS OF
January 1, 2013

TABLE OF CONTENTS

		Page
ARTICLE I.	INTRODUCTION	1
ARTICLE II.	DEFINITIONS	1
ARTICLE III.	ADMINISTRATION	3
ARTICLE IV.	DEFERRED COMPENSATION	4
ARTICLE V.	RSU ACCOUNTS	5
ARTICLE VI.	PLAN EARNINGS AND OTHER DISTRIBUTIONS	6
ARTICLE VII.	VESTING AND DISTRIBUTIONS	6
ARTICLE VIII.	TERMINATION	7
ARTICLE IX.	AMENDMENT OF THE PLAN	7
ARTICLE X.	GENERAL PROVISIONS	8
ARTICLE XI.	EFFECTIVE DATE	9

i

ARTICLE I.  INTRODUCTION

Section 1.01Purpose.  This Plan is being established by GNC Holdings, Inc. (the “Company”) to assist the Company in attracting and retaining well-qualified Directors and align the interests of the Directors with those of the Company’s stockholders by establishing a program whereby the Directors may elect to defer certain cash amounts to be paid and equity grants to be awarded to them as fees in connection with their services as Directors.  The Plan is authorized pursuant to Section 3 of the 2011 Plan.

ARTICLE II.  DEFINITIONS

As used in this Plan, the following capitalized terms shall have the following meanings:

Section 2.01“2011 Plan” shall mean the GNC Holdings, Inc. 2011 Stock and Incentive Plan and any successor plan, in each case, as amended from time to time.

Section 2.02“Administrator” shall mean the Committee, or any person(s) to whom the Board or the Committee has delegated the Committee’s functions in accordance with Section 3.01, as the context requires.

Section 2.03“Board” shall mean the Board of Directors of the Company.

Section 2.04“Cash Compensation” shall mean the cash compensation paid for services as a Director from time to time, which, as of the Effective Date, includes (a) an annual Board retainer, (b) annual committee chairperson retainers and (c) meeting fees.

Section 2.05“Cash Subaccount” shall mean the account established for deferral of a Director’s Cash Compensation pursuant to Section 5.01.

Section 2.06“Change in Control” shall have the meaning ascribed to such term in Section 2.8 of the 2011 Plan.

Section 2.07“Code” shall mean the Internal Revenue Code of 1986, as amended, and applicable Treasury regulations promulgated thereunder.

Section 2.08“Committee” shall mean the Committee described in Section 2.10 of the 2011 Plan.

Section 2.09“Common Stock” means the Company’s Class A common stock, par value $0.001 per share.

Section 2.10“Company” shall have the meaning ascribed to such term in Section 1.01.

Section 2.11“Compensation” shall mean a Participant’s compensation for services as a Director, which, as of the Effective Date, includes Cash Compensation and awards of Restricted Stock.

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Section 2.12“Deferred Compensation” shall mean Compensation deferred pursuant to the provisions of this Plan.

Section 2.13“Director” shall mean a member of the Board who is not an officer or employee of the Company.

Section 2.14“Earned,” as used herein with respect to a Director’s (a) cash annual Board retainer shall refer to the first day of each calendar quarter on which the individual is serving as a Director, (b) cash annual committee chairperson retainer(s) shall refer to the first day of each calendar quarter on which the individual is serving as the chairperson of a Board committee and (c) cash meeting fees shall refer to the date on which the meeting was attended by such Director.

Section 2.15“Effective Date” shall mean January 1, 2013.

Section 2.16“Election Deadline” shall have the meaning ascribed to such term in Section 4.01(a).

Section 2.17“Fair Market Value” means, as of any date, (a) with respect to the Common Stock, the closing price reported for the Common Stock on such date on the principal national securities exchange on which it is then traded (or if such date was not a trading day, on the trading day immediately prior thereto), or, if the Common Stock is not traded, listed or otherwise reported or quoted on a national securities exchange, the fair market value of the Common Stock on such date as determined by the Administrator; and (b) with respect to any other property, the fair market value thereof on such date as determined by the Administrator.

Section 2.18“New Directors” shall mean any Director who first is elected or appointed to the Board after the Effective Date.

Section 2.19“Participant” shall mean any Director who has elected to have all or a part of his or her Compensation deferred pursuant to the Plan.

Section 2.20“Payment Date” shall mean the earliest of (a) the date the Participant has a separation from service from the Company within the meaning of Section 409A, (b) the date of the Participant’s death and (c) if elected by the Participant, a Specified Payment Date.  Notwithstanding the foregoing, a Payment Date shall occur upon a Change in Control that qualifies as “a change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation” within the meaning of Section 409A if earlier than the Payment Date otherwise provided for under the preceding sentence of this Section 2.20.

Section 2.21“Plan” shall mean this GNC Holdings, Inc. Directors’ Non-Qualified Deferred Compensation Plan, as it may be amended and restated from time to time.

Section 2.22“Plan Earnings” shall mean amounts credited to a Participant’s RSU Account pursuant to Article VI.

2

Section 2.23“Restricted Stock” shall mean restricted stock awarded to a Director with respect to his or her services as a Director from time to time, which, as of the Effective Date, includes an annual grant of Restricted Stock.

Section 2.24“Restricted Stock Subaccount” shall mean the account established for deferral of a Director’s awards of Restricted Stock pursuant to Section 5.01.

Section 2.25“Restricted Stock Unit” shall mean a measure of value equal to one share of the Common Stock, as provided under Article X of the 2011 Plan as an “Other Stock Based Award.”

Section 2.26“RSU Account” shall mean the Participant’s Restricted Stock Unit account established pursuant to Section 5.01.

Section 2.27“Section 409A” shall mean Section 409A of the Code and the regulations promulgated thereunder.

Section 2.28“Specified Payment Date” means a date specified by a Participant at the time he or she elects to defer Compensation, which date must be January 1 of a specified year in the future, but (a) no earlier than January 1 of the second calendar year following the year in which such Compensation would have been paid had it not been deferred, and (b) no later than January 1 of the tenth calendar year following the year in which such Compensation would have been paid had it not been deferred.

Section 2.29“Vested” shall mean any Restricted Stock Units that are vested pursuant to Section 7.01.

ARTICLE III.  ADMINISTRATION

Section 3.01Administrator.  The Committee shall serve as the Administrator and shall administer all aspects of the Plan.  Notwithstanding the foregoing, (a) the full Board shall have the authority to take any action that could be taken by the Committee, and (b) the Committee may delegate some or all of its functions hereunder to a subcommittee or to one or more officers or employees of the Company in its discretion.  The Administrator shall maintain complete and adequate records pertaining to the Plan, including but not limited to Participants’ RSU Accounts.  The Administrator shall have discretionary authority to interpret and administer, correct errors in administration of, and otherwise implement the Plan, in each case consistent with the Plan’s purposes and intent.  The Administrator also shall have authority to take all actions necessary to ensure that any transactions pursuant to the Plan do not result in liability under Section 16(b) of the Securities Exchange Act of 1934.  All actions of the Administrator with respect to the Plan shall be final and binding on all persons for such Plan purposes.

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ARTICLE IV.  DEFERRED COMPENSATION

Section 4.01Elections by Participants.

(a)A Director may elect by December 31 (or such earlier date as the Administrator may prescribe) of each calendar year immediately preceding the calendar year in which:

(i)Cash Compensation is to be Earned, to defer 100% or 50%, as he or she may specify, of such Cash Compensation (and Plan Earnings thereon); and

(ii)Restricted Stock is to be awarded to the Director, to defer 100% or 50%, as he or she may specify, of such Restricted Stock (and Plan Earnings thereon).

The date by which an election must be made pursuant to the preceding sentence of this Section 4.01(a) is referred to as the “Election Deadline.”

(b)Deferral elections shall be made by completing and executing an election form prescribed by the Administrator and delivering such election form to the Administrator on or before the Election Deadline.  A separate election shall be made with respect to Cash Compensation, on the one hand, and with respect to awards of Restricted Stock on the other.  Any such election shall become irrevocable as of the close of business on the date of the Election Deadline.

(c)All Compensation elected to be deferred pursuant to this Section 4.01 shall be converted into Restricted Stock Units, credited to accounts on behalf of the Participant pursuant to Article V and paid to him or her on his or her Payment Date.

Section 4.02First Year of the Plan;  Elections by New Directors.

(a)Notwithstanding anything to the contrary in Section 4.01, with respect to any Compensation to be Earned in calendar year 2013, a Director may make an election to defer such Compensation during the first 30 days of calendar year 2013 (or such earlier date as the Administrator may prescribe), provided that with respect to any Compensation, such election is made before such Compensation actually is paid.

(b)Notwithstanding anything to the contrary in Section 4.01, any New Director may make an initial election within 30 days after the commencement of such New Director’s service on the Board (or such earlier date as the Administrator may prescribe), to defer 100% or 50%, as he or she may specify, of the Compensation (and Plan Earnings thereon) to be Earned by him or her in the calendar year of such New Director’s election or appointment to the Board, provided that, with respect to any Compensation, such election is made before such Compensation actually is paid.

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(c)The deferral elections described in the preceding paragraphs shall be made by completing and executing an election form prescribed by the Administrator and delivering such election form to the Administrator within the timeframes described in Sections 4.02(a) and (b), respectively.  Separate elections shall be made with respect to Cash Compensation, on the one hand, and with respect to Restricted Stock on the other.  Such elections shall become irrevocable as of the close of business on the last day of the applicable timeframes.

(d)A Participant’s deferral election, whether with respect to Cash Compensation or Restricted Stock, shall apply only to compensation paid for services performed after the effective date of the election.

(e)All Compensation elected to be deferred pursuant to this Section 4.02 shall be converted into Restricted Stock Units, credited to accounts on behalf of the Participant pursuant to Article V and paid to him or her on his or her Payment Date.

ARTICLE V.  RSU ACCOUNTS

Section 5.01Establishment of RSU Accounts.  There shall be established for each Participant an account to be designated as such Participant’s RSU Account.  The RSU Account of each Participant shall consist, to the extent applicable to the Participant, of a Cash Subaccount and a Restricted Stock Subaccount.

Section 5.02Allocations to Accounts.

(a)Any Deferred Compensation that is attributable to deferrals of Cash Compensation shall be credited to the Cash Subaccount of a Participant on the date such amount otherwise would have been paid to the Participant, and any Plan Earnings shall be credited in accordance with the provisions of Article VI, as applicable.

(b)Any Deferred Compensation that is attributable to deferrals of Restricted Stock shall be credited to the Restricted Stock Subaccount of such Participant on the date the award of Restricted Stock otherwise would have been made to such Participant, and any Plan Earnings shall be credited in accordance with the provisions of Article VI, as applicable.

(c)Separate records shall be kept with respect to each Participant of the Cash Compensation, on the one hand, and Restricted Stock awards, on the other, deferred under Sections 4.01 and 4.02, as such deferrals may be payable at different times from one another, and, in the case of awards of Restricted Stock, each year’s award will be subject to a separate vesting schedule under Section 7.01.

Section 5.03RSU Account.  The number of Restricted Stock Units, or fractions thereof, to be credited to a Participant’s RSU Account in accordance with this Article V (with respect to both Cash Compensation and awards of Restricted Stock) shall equal (a) with respect to Cash

5

Compensation, the amount of such Cash Compensation divided by the Fair Market Value per share of the Common Stock on the date such Cash Compensation is credited to such Director’s Cash Subaccount, and (b) with respect to awards of Restricted Stock, the number of shares comprising such award.  Any Cash Compensation that cannot be deferred into a whole number of Restricted Stock Units will be rounded down to the next lowest whole number of Restricted Stock Units, and any remainder shall be paid in cash to the Participant and not deferred under the Plan.  Any partial deferral election that would produce a fractional number of Restricted Stock Units shall be rounded down to next lowest whole number of Restricted Stock Units.

ARTICLE VI.  PLAN EARNINGS AND OTHER DISTRIBUTIONS

Section 6.01Cash and Property Dividend Credits.  Additional Restricted Stock Units shall be credited to a Participant’s RSU Account throughout the period of such Participant’s participation in the Plan until all distributions to which the Participant is entitled under Section 7.02 or Article VIII have been made, in amounts equal in number to the number of shares (including fractional shares) of Common Stock with a Fair Market Value equal to (i) the amount of any cash dividends or distributions and (ii) the Fair Market Value of any distributions of property (other than the Common Stock but including any such securities convertible into the Common Stock), in each case to which the Participant would have been entitled from time to time had he or she been the owner on the record dates for the payment of such dividends or distributions of the number of shares of the Common Stock equal to the number of Restricted Stock Units in his or her RSU Account on such dates.  Each such credit shall be effective as of the payment date for such dividend or distribution.

Section 6.02Dividend Credits.  Additional Restricted Stock Units shall be credited to a Participant’s RSU Account throughout the period of his or her participation in the Plan until all distributions to which the Participant is entitled under Section 7.02 or Article VIII have been made, equal in number to the number of shares (including fractional shares) of Common Stock to which the Participant would have been entitled from time to time as Common Stock dividends had such Participant been the owner on the record dates for the payments of such stock dividends of a number of shares of Common Stock equal to the number of Restricted Stock Units credited to his or her RSU Account on such dates.  Each such credit shall be effective as of the payment date for such dividend.

ARTICLE VII.  VESTING AND DISTRIBUTIONS

Section 7.01Vesting.  A Participant shall be one hundred percent vested at all times in his or her Cash Subaccount (including Plan Earnings thereon).  A Participant’s Restricted Stock Subaccount (including Plan Earnings thereon) shall vest separately with respect to each award of Restricted Stock deferred by the Participant, at the same rate, and subject to the same conditions, pursuant to which the award of Restricted Stock would have vested according to the terms of such award.

Section 7.02Distributions from RSU Account.  When a Payment Date in respect of a Participant occurs, each Restricted Stock Unit that is Vested shall be converted into one share of Common Stock and such shares shall be distributed to such Participant at the times and in the

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manner prescribed in paragraphs (a) through (d) below.  Any Restricted Stock Unit that is not Vested as of such Payment Date shall be forfeited.

(a)Except as otherwise provided in paragraphs (b), (c) and (d) below, distribution shall be made in a lump sum within 30 days following such Payment Date.  All Plan Earnings accrued to the date of any distribution shall be paid in conjunction with such payment.

(b)In the case of a Participant who is a specified employee, within the meaning of Section 409A, unless the distribution is due to death or payable on a Specified Payment Date prior to such Participant’s “separation from service” within the meaning of Section 409A, distribution shall be made within 30 days following the first day of the seventh month following the month in which such Participant’s separation from service occurs.

(c)If such Payment Date shall occur by reason of the Participant’s death, or if the Participant dies after such Payment Date but prior to receipt of all distributions provided for in this Section 7.02, all remaining Restricted Stock Units shall be converted into shares of Common Stock and distributed in the following order:  (i) to such Participant’s beneficiary selected by the Participant on a form provided by the Administrator; (ii) if there is no such beneficiary designation effective at the Participant’s death, to the Participant’s surviving spouse; or (iii) if there is no such beneficiary designation effective or surviving spouse at the Participant’s death, to the Participant’s estate or personal representative, in each case as soon as administratively feasible following such Participant’s death, but in no event later than 90 days following the Participant’s death, provided the recipient shall not have a right to designate the taxable year of the payment.

(d)Any fraction of a Restricted Stock Unit to be distributed shall be converted into an amount in cash equal to the Fair Market Value of one share of the Common Stock on the trading day immediately preceding the date of distribution, multiplied by such fraction, and such cash shall be distributed.

ARTICLE VIII.  TERMINATION

The Committee may terminate the Plan at any time.  Upon termination of the Plan, no further amounts shall be deferred hereunder, and distributions in respect of credits to Participants’ RSU Accounts as of the date of termination shall be made in the manner and at the time prescribed under Section 7.02 or otherwise as required or permitted under Section 409A.

ARTICLE IX.  AMENDMENT OF THE PLAN

The Committee may, without the consent of Participants or their beneficiaries, amend the Plan at any time and from time to time; provided, that no amendment may reduce the number of Restricted Stock Units allocated to a Participant’s RSU Account as of the date of such amendment without such Participant’s consent.

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ARTICLE X.  GENERAL PROVISIONS

Section 10.01Funding.  Benefits payable under the Plan shall be paid from the general funds of the Company, and nothing contained herein shall give any Participant any rights that are greater than those of a general unsecured creditor of the Company.  The Company shall not be required to fund or otherwise segregate assets to be used for payment of benefits under the Plan.  While the Company may cause investments in shares of Common Stock to be made through open market purchases in amounts equal or unequal to amounts payable hereunder, the Company shall not be under any obligation to make such investments and any such investment and all obligations of the Company under the Plan shall remain subject to the claims of its general creditors.  The amounts payable to any Participants under the Plan shall not be affected by any such investment.  Notwithstanding the foregoing, the Company, in its discretion, may maintain one or more trusts to hold assets to be used for payment of benefits under the Plan; provided, that the assets of such trust shall be subject to the creditors of the Company in the event that the Company becomes insolvent or is subject to bankruptcy or insolvency proceedings.  Any payments by such a trust of benefits provided hereunder shall be considered payment by the Company and shall discharge the Company of any further liability for the payments made by such trust.

Section 10.02No Right to Directorship.  The Plan shall not give any Participant any right with respect to continuance of directorship of the Company or limit in any way the right of the Company to terminate his or her directorship at any time.

Section 10.03Authorized Payments.  If the Committee receives evidence satisfactory to it that any person entitled to receive a payment hereunder is, at the time the benefit is payable, physically, mentally or legally incompetent to receive such payment and to give a valid receipt therefor, and that an individual or institution is then maintaining or has custody of such person and that no guardian, committee or other representative of the estate of such person has been duly appointed, the Committee may direct that such payment be paid to such individual or institution maintaining or having custody of such person, and the receipt of such individual or institution shall be valid and a complete discharge for the payment of such benefit.

Section 10.04Section 409A.  Although the Company makes no guarantee with respect to the tax treatment of payments and benefits hereunder, the Plan is intended to comply with the applicable requirements of Section 409A and shall be limited, construed and interpreted in accordance with such intent.  Accordingly, and notwithstanding Article IX, the Company reserves the right to amend the provisions of the Plan at any time in order to avoid the imposition of an excise tax under Section 409A on any payments deferred, accrued or to be made hereunder.  In no event shall the Company or any of its affiliates be liable for any additional tax, interest or penalty that may be imposed on a Participant by Section 409A or for damages for failing to comply with Section 409A, other than for withholding or other obligations applicable to employers, if any, under Section 409A.

Section 10.05Construction.  Wherever any words are used herein in the masculine, feminine or neuter gender, they shall be construed as though they were also used in another gender in all cases where they would so apply, and whenever any words are used herein in the singular or plural form, they shall be construed as though they were also used in the other form

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in all cases where they would so apply.  As used herein, (a) “or” shall mean “and/or” and (b) “including” or “include” shall mean “including, without limitation.”

Section 10.06Assignment of Benefits.  Benefits provided under the Plan may not be transferred, assigned or alienated by the Participant, either voluntarily or involuntarily, other than by will or the laws of descent and distribution.

Section 10.07Governing Law.  The Plan and the actions taken in connection herewith shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to its principles of conflict of laws.

Section 10.082011 Plan.  Restricted Stock Units under the Plan shall be subject to the provisions of the 2011 Plan, including Article X thereof, which are incorporated herein by reference.

Section 10.09Not a Qualified Plan; Not Subject to ERISA.  The Plan is not intended to qualify under Section 401(a) of the Code or to be subject to the Employee Retirement Income Security Act of 1974, as amended.

ARTICLE XI.  EFFECTIVE DATE

This Plan shall be effective as of the Effective Date, and shall continue in force during subsequent years unless amended or revoked by action of the Committee.

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IN WITNESS WHEREOF, this Plan has been duly executed by the Company as of the Effective Date.

GNC HOLDINGS, INC.
By:	/s/ Gerald J. Stubenhofer, Jr
Name:			Gerald J. Stubenhofer, Jr
Title:		Senior Vice President, Chief Legal Officer and Secretary

EX-10.2

Exhibit 10.2

FORM OF

RESTRICTED STOCK UNIT AGREEMENT

PURSUANT TO THE

GNC HOLDINGS, INC. 2011 STOCK AND INCENTIVE PLAN

AGREEMENT (the “Agreement”), effective as of ___________ (the “Grant Date”), between GNC Holdings, Inc., a Delaware corporation (the “Company”), and __________ (the “Participant”). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the GNC Holdings, Inc. 2011 Stock and Incentive Plan (the “Stock Plan”).

W I T N E S S E T H:

WHEREAS, pursuant to a deferral election filed with the Company under the GNC Holdings, Inc. Directors’ Non-Qualified Deferred Compensation Plan (the “Deferral Plan”), the Participant has elected to defer ____% of his/her restricted stock awards into restricted stock units vesting on the same date or dates as the restricted stock awards and distributable to the Participant as provided in the Deferral Plan;

NOW, THEREFORE, for and in consideration of the mutual promises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.Grant of Restricted Stock Units.  The Company hereby awards to the Participant ____ restricted stock units (the “RSUs”) as of the Grant Date. Each RSU represents the right to receive one share of Common Stock on the Payment Date in Section 2(a), subject to satisfaction of the vesting conditions in Section 2(a).

2.Terms of Retricted Stock Units.

(a)Vesting and Payment.

(i)The RSUs will vest on _____________, provided that the Participant has not incurred a Termination of Directorship prior to such date. There shall be no proportionate or partial vesting in the periods between the Grant Date and the vesting date and vesting shall occur only on each vesting date, provided that no Termination of Directorship has occurred prior to such date.

(iii)Pursuant to the Participant’s deferral election, the RSUs (to the extent vested) shall be payable on _______________ (or such earlier date or event as provided for under the Deferral Plan) (the “Payment Date”). Upon or promptly (and in no event later than 30 days) after the Payment Date, the Company shall issue and deliver, unless the Company is using book entry, to the Participant a stock certificate registered in the name of the Participant representing one share of Common Stock (a “Share”) for each vested RSU and deliver to the Participant any related Dividend Equivalents (as defined below), subject to applicable withholding.  Upon payment of the Shares, the vested RSUs will be deemed fully settled and will be cancelled.

(b)Dividend Equivalents.  If the Company pays cash or stock dividends on the Common Stock, the Participant shall receive credit for such dividends (“Dividend Equivalents”) in accordance with Article VI of the Deferral Plan.

(c)Forfeiture.  The Participant shall forfeit to the Company, without compensation, any and all unvested RSUs upon the Participant’s Termination of Directorship for any reason.  Additionally, in the event the Participant engages in Detrimental Activity prior to, or during the one year period after, any vesting of RSUs, all unvested RSUs shall be immediately forfeited to the Company and the Participant shall pay to the Company an amount equal to the Fair Market Value at the time of vesting of any RSU which had vested in the period referred to above.

(d)Withholding.  The Participant shall pay, or make arrangements to pay, in a manner satisfactory to the Company, an amount equal to the amount of any applicable foreign, federal, state, provincial and local taxes that the Company is required to withhold at any time.  In the absence of such arrangements, any statutorily required withholding obligation may, as determined at the sole discretion of the Committee, be satisfied by reducing the number of Shares otherwise deliverable to the Participant by a number of Shares whose Fair Market Value on the applicable vesting date is equal to the amount of taxes required to be withheld (disregarding any fraction of a Share required to satisfy such tax obligations, which fractional amount due must be paid instead in cash by the Participant).

(e)Delivery Delay.  The delivery of any certificate representing the Shares may be postponed by the Company for such period as may be required for it to comply with any applicable foreign, federal, state or provincial securities law, or any national securities exchange listing requirements, and the Company is not obligated to issue or deliver any Shares if, in the opinion of counsel for the Company, such issuance or delivery constitutes a violation by the Participant or the Company of any provisions of any applicable foreign, federal, state or provincial law or of any regulations of any governmental authority or any national securities exchange.

3.No Obligation to Continue Directorship.  This Agreement is not an agreement of directorship.  This Agreement does not guarantee that the Company or its Affiliates will engage or retain, or continue to engage or retain the Participant for any period of time, nor does it modify in any respect the Company’s (or any Affiliate’s) right to terminate or modify the Participant’s directorship or compensation.

4.Transferability.  The Participant is prohibited to sell, transfer, pledge, hypothecate, assign or otherwise dispose of the RSUs.  Any attempted sale, transfer, pledge, hypothecation, assignment or other disposition of the RSUs in violation of the Stock Plan, the Deferral Plan or this Agreement shall be void and of no effect and the Company shall have the right to disregard the same on its books and records and to issue “stop transfer” instructions to its transfer agent.

5.Uncertificated Shares.  Notwithstanding anything else herein, to the extent permitted under applicable foreign, federal, state or provincial law, the Company may issue the Shares in the form of uncertificated shares. Such uncertificated shares shall be credited to a book entry account maintained by the Company (or its designee) on behalf of the Participant. If thereafter certificates are issued with respect to the uncertificated shares, such issuance and delivery of certificates shall be in accordance with the applicable terms of this Agreement.

6.Rights as a Stockholder.  The Participant shall have no rights as a stockholder with respect to any Shares unless and until the Participant has become the holder of record of the Shares, and no adjustments will be made for dividends in cash or other property, distributions or other rights in respect of any such Shares, except as otherwise specifically provided for in this Agreement or the Stock Plan.

7.Provisions of Plans Control.  This Agreement is subject to all the terms, conditions and provisions of the Stock Plan and the Deferral Plan (together, the “Plans”), including, without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plans as may be adopted by the Committee and as may be in effect from time to time.  The Plans are incorporated herein by reference.  By signing and returning this Agreement, the Participant acknowledges having received and read a copy of each of the Plans and agrees to comply with each Plan, this Agreement and all applicable laws and regulations. If and to the extent that this Agreement conflicts or is inconsistent with the terms, conditions and provisions of either Plan, the applicable Plan shall control, and this Agreement shall be deemed to be modified accordingly. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes any prior agreements between the Company and the Participant with respect to the subject matter hereof.

8.Amendment.  To the extent applicable, the Board or the Committee may at any time and from time to time amend, in whole or in part, any or all of the provisions of this Agreement to comply with Section 409A of the Code and the regulations thereunder or any other applicable law and may also amend, suspend or terminate this Agreement subject to the terms of the Plans. Except as otherwise provided in the Plans, no modification or waiver of any of the provisions of this Agreement shall be effective unless in writing by the party against whom it is sought to be enforced. This Agreement is intended to comply with the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in a manner so as to comply therewith.

9.Notices.  Any notice or communication given hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, or by regular United States mail, first class and prepaid, to the appropriate party at the address set forth below (or such other address as the party shall from time to time specify):

If to the Company, to:

GNC Holdings, Inc.

300 Sixth Avenue

Pittsburgh, Pennsylvania 15222

Attention: Chief Legal Officer

with a copy (which shall not constitute notice) to:

McGuireWoods LLP
EQT Plaza
625 Liberty Avenue, 23rd Floor
Pittsburgh, Pennsylvania 15222
Attention:  Scott E. Westwood

If to the Participant, to the address on file with the Company.

10.Miscellaneous.

(a)This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legal representatives, successors and assigns.

(b)This Agreement shall be governed and construed in accordance with the laws of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).

(c)This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one contract.

(d)The failure of any party hereto at any time to require performance by another party of any provision of this Agreement shall not affect the right of such party to require performance of that provision, and any waiver by any party of any breach of any provision of this Agreement shall not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself, or a waiver of any right under this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written.

	GNC HOLDINGS, INC.
	By:
	Name:
	Title:
PARTICIPANT
By:
Name:

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph M. Fortunato, certify that:

1.I have reviewed this Form 10-Q of GNC Holdings, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses 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 have a significant role in the registrant’s internal control over financial reporting.

	/s/ Joseph M. Fortunato
Date: May 2, 2013	Joseph M. Fortunato
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Michael M. Nuzzo, certify that:

1.I have reviewed this Form 10-Q of GNC Holdings, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses 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 have a significant role in the registrant’s internal control over financial reporting.

	/s/ Michael M. Nuzzo
Date: May 2, 2013	Michael M. Nuzzo
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification of CEO and CFO Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of GNC Holdings, Inc. (the “Company”), for the quarterly period ended March 31, 2013 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 Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1)        The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)        The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Joseph M. Fortunato
Name:	Joseph M. Fortunato
Title:	Chief Executive Officer
	(Principal Executive Officer)
Date:	May 2, 2013
/s/ Michael M. Nuzzo
Name:	Michael M. Nuzzo
Title:	Chief Financial Officer
	(Principal Financial Officer)
Date:	May 2, 2013

This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

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INCOME TAXES (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
INCOME TAXES
Income tax expense	$ 40,862,000	$ 37,829,000
Effective income tax rate (as a percent)	36.00%	37.20%
Unrecognized tax benefits	12,900,000		12,900,000
Unrecognized tax benefits that would affect the effective tax rate	12,900,000
Interest and penalties accrued related to unrecognized tax benefits	$ 5,700,000		$ 5,700,000

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LONG-TERM DEBT / INTEREST EXPENSE (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Long-term Debt
Total Debt	$ 1,097,746,000		$ 1,098,562,000
Less: current maturities	(3,816,000)		(3,817,000)
Long-term debt	1,093,930,000		1,094,745,000
Interest expense, net	11,015,000	10,383,000
Senior credit facility
Long-term Debt
Total Debt	1,095,739,000		1,096,112,000
Term Loan Facility
Long-term Debt
Interest expense, net	11,000,000	10,400,000
Interest rate (as a percent)	3.75%		3.75%
Revolving Credit Facility
Long-term Debt
Interest rate (as a percent)	3.00%		3.00%
Letter of credit
Long-term Debt
Outstanding letters of credit	1,100,000		1,100,000
Mortgage
Long-term Debt
Total Debt	2,003,000		2,444,000
Capital leases
Long-term Debt
Total Debt	$ 4,000		$ 6,000

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STOCK-BASED COMPENSATION PLANS (Tables)

3 Months Ended

Mar. 31, 2013

STOCK-BASED COMPENSATION PLANS

Summary of stock options under all plans

				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
		Exercise		Contractual Term	Value (in
	Total Options	Price		(in years)	thousands)
Outstanding at December 31, 2012	3,159,542	$	18.96
Granted	10,017	42.19
Exercised	(449,872)	9.34
Forfeited	(16,667)	27.74
Outstanding at March 31, 2013	2,703,020	$	20.60	6.1	$	50,527
Exercisable at March 31, 2013	896,748	$	14.66	5.9	$	22,079

Schedule of assumptions used in valuation related to stock option grants made during the period

Dividend yield	1.4%
Expected option life	4.8 years
Volatility factor percentage of market price	40.1%
Discount rate	0.9%

Restricted Stock

Stock-based compensation plans

Summary of stock awards (retsricted stock and RSU's) granted under the 2011 Stock Plan and related information

		Weighted
		Average
	Restricted	Grant-Date
	Stock	Fair Value
Outstanding at December 31, 2012	123,941	$	24.24
Granted	5,526	40.64
Forfeited	(2,225)	29.06
Outstanding at March 31, 2013	127,242	$	24.87

Restricted Stock Units

Stock-based compensation plans

Summary of stock awards (retsricted stock and RSU's) granted under the 2011 Stock Plan and related information

	Time	Weighted		Performance	Weighted
	Vesting	Average		Vesting	Average
	Restricted	Grant-Date		Restricted	Grant-Date
	Stock Units	Fair Value		Stock Units	Fair Value
Outstanding at December 31, 2012	171,937	$	36.16	-	$	-
Granted	7,622	41.52		45,327	42.19
Outstanding at March 31, 2013	179,559	$	36.39	45,327	$	42.19

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STOCK-BASED COMPENSATION PLANS (Details 2) (USD $)	3 Months Ended
	Mar. 31, 2013
Stock option
Assumptions used in valuation related to stock option grants
Dividend yield (as a percent)	1.40%
Expected option life	4 years 9 months 18 days
Volatility factor percentage of market price	40.10%
Discount rate (as a percent)	0.90%
Stock option | Minimum
Weighted Average Grant-Date Fair Value
Vesting period	4 years
Stock option | Maximum
Weighted Average Grant-Date Fair Value
Vesting period	5 years
2011 Stock Plan | Restricted Stock
Restricted stock and restricted stock units
Outstanding at the beginning of the period (in shares)	123,941
Granted (in shares)	5,526
Forfeited (in shares)	(2,225)
Outstanding at the end of the period (in shares)	127,242
Weighted Average Grant-Date Fair Value
Outstanding at the beginning of the period (in dollars per share)	24.24
Granted (in dollars per share)	40.64
Forfeited (in dollars per share)	29.06
Outstanding at the end of the period (in dollars per share)	24.87
Vested (in shares)	0
2011 Stock Plan | Time Vesting Restricted Stock Units
Restricted stock and restricted stock units
Outstanding at the beginning of the period (in shares)	171,937
Granted (in shares)	7,622
Outstanding at the end of the period (in shares)	179,559
Weighted Average Grant-Date Fair Value
Outstanding at the beginning of the period (in dollars per share)	36.16
Granted (in dollars per share)	41.52
Outstanding at the end of the period (in dollars per share)	36.39
Vesting period	3 years
Vested (in shares)	0
2011 Stock Plan | Performance Vesting Restricted Stock Units
Restricted stock and restricted stock units
Granted (in shares)	45,327
Outstanding at the end of the period (in shares)	45,327
Weighted Average Grant-Date Fair Value
Granted (in dollars per share)	42.19
Outstanding at the end of the period (in dollars per share)	42.19
Vested (in shares)	0
2011 Stock Plan | Performance Vesting Restricted Stock Units | Minimum
Weighted Average Grant-Date Fair Value
Vesting percentage	0.00%
2011 Stock Plan | Performance Vesting Restricted Stock Units | Maximum
Weighted Average Grant-Date Fair Value
Vesting percentage	200.00%

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2013

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. The year-end consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s audited financial statements in Holdings’ Annual Report on Form 10-K filed for the year ended December 31, 2012. There have been no material changes to the application of significant accounting policies and significant judgments and estimates since December 31, 2012.

The accompanying unaudited consolidated financial statements include all adjustments (consisting of a normal and recurring nature) that management considers necessary for a fair statement of financial information for the interim periods. Interim results are not necessarily indicative of the results that may be expected for the remainder of the year ending December 31, 2013.

Principles of Consolidation. The consolidated financial statements include the accounts of Holdings and all of its subsidiaries. All material intercompany transactions have been eliminated in consolidation.

The Company has no relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off balance sheet arrangements, or other contractually narrow or limited purposes.

Use of Estimates.  The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Accordingly, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Some of the most significant estimates pertaining to the Company include the valuation of inventories, the allowance for doubtful accounts and income taxes. On a regular basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.

Transaction Related Costs.  The Company recognizes transaction related costs as expenses in the period incurred.  For the three months ended March 31, 2013, the Company incurred no transaction related costs. For the three months ended March 31, 2012, the Company incurred $0.7 million of expenses related to the March 2012 offering.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (the “FASB”) issued an accounting standard regarding the reclassification of amounts out of accumulated other comprehensive income (“AOCI”).  This standard does not change the current requirements for reporting net income or other comprehensive income. However, the standard requires disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement of operations or in the footnotes to the financial statements. Amounts that are not required to be reclassified in their entirety to net income must be cross-referenced to other disclosures that provide additional detail. This guidance is effective for fiscal years beginning after December 15, 2012. The Company adopted this guidance during the first quarter of 2013. The adoption of this guidance had no material impact on the Company’s consolidated financial statements.

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INVENTORIES (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
INVENTORIES
Finished product ready for sale	$ 427,837	$ 415,096
Work-in-process, bulk product and raw materials	75,982	70,022
Packaging supplies	6,900	6,481
Total	$ 510,719	$ 491,599

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Transaction related costs
Expenses, related to the Offering	$ 0	$ 0.7

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GOODWILL AND INTANGIBLE ASSETS, NET (Details) (Franchise stores, USD $) In Millions, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2013 item	Dec. 31, 2012 item
Franchise stores
Acquisitions
Number of franchise stores acquired	7	13
Total purchase prices associated with acquisitions	$ 1.7	$ 2.6
Cash paid	$ 1.2	$ 1.1

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GOODWILL AND INTANGIBLE ASSETS, NET (Details 2) (USD $) In Thousands, unless otherwise specified			3 Months Ended			3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Franchise stores	Mar. 31, 2013 Retail	Dec. 31, 2012 Retail	Mar. 31, 2013 Retail Franchise stores	Mar. 31, 2013 Franchising	Dec. 31, 2012 Franchising	Mar. 31, 2013 Manufacturing/Wholesale	Dec. 31, 2012 Manufacturing/Wholesale
Changes in amount of goodwill during the period
Balance at the beginning of the period	$ 641,024	$ 639,915		$ 320,880	$ 319,771		$ 117,303	$ 117,303	$ 202,841	$ 202,841
Acquired during period			1,109			1,109
Balance at the end of the period (unaudited)	$ 641,024	$ 639,915		$ 320,880	$ 319,771		$ 117,303	$ 117,303	$ 202,841	$ 202,841

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NATURE OF BUSINESS

3 Months Ended

Mar. 31, 2013

NATURE OF BUSINESS

NATURE OF BUSINESS

NOTE 1.  NATURE OF BUSINESS

General Nature of Business. GNC Holdings, Inc., a Delaware corporation (“Holdings,” and collectively with its subsidiaries and, unless the context requires otherwise, its and their respective predecessors, the “Company”), is a global specialty retailer of health and wellness products, which include: vitamins, minerals and herbal supplements, sports nutrition products, diet products and other wellness products.

The Company is vertically integrated, as its operations consist of purchasing raw materials, formulating and manufacturing products and selling the finished products through its three segments: Retail, Franchising and Manufacturing/Wholesale. Corporate retail store operations are located in the United States, Canada and Puerto Rico, and in addition, the Company offers products domestically through GNC.com, LuckyVitamin.com and www.drugstore.com. Franchise stores are located in the United States and over 50 international countries (including distribution centers where retail sales are made). The Company operates its primary manufacturing facilities in South Carolina and distribution centers in Arizona, Pennsylvania and South Carolina. The Company manufactures the majority of its branded products, but also merchandises various third-party products. Additionally, the Company licenses the use of its trademarks and trade names.

The processing, formulation, packaging, labeling and advertising of the Company’s products are subject to regulation by one or more federal agencies, including the Food and Drug Administration (the “FDA”), the Federal Trade Commission, the Consumer Product Safety Commission, the United States Department of Agriculture and the Environmental Protection Agency. These activities are also regulated by various agencies of the states and localities in which the Company’s products are sold.

Recent Significant Transactions. In April 2011, Holdings consummated an initial public offering (the “IPO”) of 25.9 million shares of its Class A common stock, par value $0.001 per share (the “Class A common stock”), at an IPO price of $16.00 per share. Prior to the IPO, Holdings’ outstanding common stock was principally owned by Ontario Teachers’ Pension Plan Board (“OTPP”) and Ares Corporate Opportunities Fund II L.P. (“Ares”, and together with OTPP, collectively referred to as the “Sponsors”). On March 19, 2012, OTPP converted all of its shares of Class B common stock into an equal number of shares of Class A common stock. Subsequent to the IPO, certain of Holdings’ stockholders, including the Sponsors, completed the following registered offerings of Class A common stock:

· in October 2011, 23.0 million shares at $24.75 per share;

· in March 2012, 19.6 million shares at $33.50 per share;

· in August 2012,10.0 million shares at $38.42 per share; and,

· in November 2012, 11.7 million shares at $35.20 per share.

In conjunction with the August 2012 offering, the Company repurchased an additional six million shares of Class A common stock from Ares as part of a share repurchase program. As of December 31, 2012, Ares no longer owns any shares of our capital stock and OTPP owns less than 10,000 shares of our Class A common stock.

As of March 31, 2013, the Company had completed $61.3 million of its February 2013 approved $250.0 million share repurchase program of Class A common stock.

In March 2011, GNC Corporation and General Nutrition Centers, Inc., each a wholly owned subsidiary of Holdings, entered into a Credit Agreement (the “Credit Agreement”) that provided for a $1.2 billion term loan (the “Term Loan Facility”) and an $80.0 million revolving credit facility (the “Revolving Credit Facility” and together with the Term Loan Facility, the “Senior Credit Facility”). On August 1, 2012, the Credit Agreement was amended to increase the outstanding borrowings by $200.0 million (the “Incremental Term Loan”).  In October 2012, the Credit Agreement was amended to adjust the per annum interest rate to the greater of LIBOR and 1.00%, plus an applicable margin of 2.75% (the “Repricing”).

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GOODWILL AND INTANGIBLE ASSETS, NET (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Changes in amount of indefinite lived intangible assets during the period
Balance at the beginning of the period	$ 720,000
Balance at the end of the period	720,000
Changes in amount of finite lived intangible assets during the period
Acquired franchise stores	186
Amortization expense	(2,120)
Balance at the end of the period	139,783
Changes in amount of intangible assets during the period
Total at the beginning of the period	861,717
Acquired franchise stores	186
Amortization expense	(2,120)
Total at the end of the period	859,783
Intangible assets, net
Weighted Average Life	24 years 6 months
Brands	720,000
Accumulated Amortization	(47,137)	(45,017)
Carrying Amount	139,783
Total Cost	906,920	906,734
Total Carrying Amount	859,783
Future estimated amortization expense of other intangible assets, net, with definite lives
2013	6,330
2014	8,177
2015	8,034
2016	7,948
2017	7,898
Thereafter	101,396
Total	139,783
Operating Agreements
Changes in amount of finite lived intangible assets during the period
Balance at the beginning of the period	132,317
Amortization expense	(1,663)
Balance at the end of the period	130,654
Changes in amount of intangible assets during the period
Amortization expense	(1,663)
Intangible assets, net
Carrying Amount	130,654
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	130,654
Retail agreements
Changes in amount of finite lived intangible assets during the period
Balance at the beginning of the period	24,751
Balance at the end of the period	24,488
Intangible assets, net
Weighted Average Life	30 years 2 months 12 days
Cost	31,000	31,000
Accumulated Amortization	(6,512)	(6,249)
Carrying Amount	24,488
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	24,488
Franchise agreements
Changes in amount of finite lived intangible assets during the period
Balance at the beginning of the period	53,783
Balance at the end of the period	53,083
Intangible assets, net
Weighted Average Life	25 years
Cost	70,000	70,000
Accumulated Amortization	(16,917)	(16,217)
Carrying Amount	53,083
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	53,083
Manufacturing agreements
Changes in amount of finite lived intangible assets during the period
Balance at the beginning of the period	53,783
Balance at the end of the period	53,083
Intangible assets, net
Weighted Average Life	25 years
Cost	70,000	70,000
Accumulated Amortization	(16,917)	(16,217)
Carrying Amount	53,083
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	53,083
Other Intangibles Including Franchise Rights
Changes in amount of finite lived intangible assets during the period
Balance at the beginning of the period	9,400
Acquired franchise stores	186
Amortization expense	(457)
Balance at the end of the period	9,129
Changes in amount of intangible assets during the period
Acquired franchise stores	186
Amortization expense	(457)
Intangible assets, net
Carrying Amount	9,129
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	9,129
Other intangibles
Changes in amount of finite lived intangible assets during the period
Balance at the beginning of the period	8,449
Balance at the end of the period	8,146
Intangible assets, net
Weighted Average Life	11 years 4 months 24 days
Cost	10,600	10,600
Accumulated Amortization	(2,454)	(2,151)
Carrying Amount	8,146
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	8,146
Franchise Rights
Changes in amount of finite lived intangible assets during the period
Balance at the beginning of the period	951
Balance at the end of the period	983
Intangible assets, net
Weighted Average Life	3 years 8 months 12 days
Cost	5,320	5,134
Accumulated Amortization	(4,337)	(4,183)
Carrying Amount	983
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	983
Retail Brand
Changes in amount of indefinite lived intangible assets during the period
Balance at the beginning of the period		500,000
Balance at the end of the period	500,000	500,000
Intangible assets, net
Brands	500,000	500,000
Franchise Brand
Changes in amount of indefinite lived intangible assets during the period
Balance at the beginning of the period		220,000
Balance at the end of the period	220,000	220,000
Intangible assets, net
Brands	$ 220,000	$ 220,000

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RELATED PARTY TRANSACTIONS (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012 Cadillac Fairview	Mar. 31, 2013 Cadillac Fairview item	Mar. 31, 2013 Ontrea item	Dec. 31, 2012 OTPP Class A Common Stock Minimum	Dec. 31, 2012 Ares
Related party transaction
Number of lease agreements entered into by the company		16	1
Amount paid under lease agreements	$ 0.7
Number of shares of common stock owned by related party				10,000	0

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 176,164	$ 158,541
Receivables, net	137,659	129,641
Inventories (Note 3)	510,719	491,599
Prepaids and other current assets	41,769	39,016
Total current assets	866,311	818,797
Long-term assets:
Goodwill (Note 4)	641,024	639,915
Brands (Note 4)	720,000	720,000
Other intangible assets, net (Note 4)	139,783	141,717
Property, plant and equipment, net	198,928	199,487
Other long-term assets	33,142	32,124
Total long-term assets	1,732,877	1,733,243
Total assets	2,599,188	2,552,040
Current liabilities:
Accounts payable	138,621	125,165
Current portion, long-term debt (Note 5)	3,816	3,817
Deferred revenue and other current liabilities	142,011	116,337
Total current liabilities	284,448	245,319
Long-term liabilities:
Long-term debt (Note 5)	1,093,930	1,094,745
Deferred tax liabilities, net	283,576	283,203
Other long-term liabilities	48,349	46,734
Total long-term liabilities	1,425,855	1,424,682
Total liabilities	1,710,303	1,670,001
Common stock, $0.001 par value, 330,000 shares authorized:
Paid-in-capital	820,964	810,094
Retained earnings	550,570	492,687
Treasury stock, at cost	(485,210)	(423,900)
Accumulated other comprehensive income	2,450	3,047
Total stockholders' equity	888,885	882,039
Total liabilities and stockholders' equity	2,599,188	2,552,040
Class A Common Stock
Common stock, $0.001 par value, 330,000 shares authorized:
Common stock	$ 111	$ 111

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Consolidated Statements of Stockholders' Equity (USD $) In Thousands, unless otherwise specified	Total USD ($)	Treasury Stock USD ($)	Paid-in-Capital USD ($)	Retained Earnings USD ($)	Accumulated Other Comprehensive Income/(Loss) USD ($)	Class A Common Stock	Class A Common Stock Common Stock USD ($)	Class B Common Stock Common Stock USD ($)
Balance at Dec. 31, 2011	$ 978,462	$ (65,048)	$ 741,848	$ 298,831	$ 2,724		$ 105	$ 2
Balance (in shares) at Dec. 31, 2011							102,985	2,060
Increase (Decrease) in Stockholders' Equity
Comprehensive income	64,211			63,857	354
Conversion of Class B stock to Class A stock							2	(2)
Conversion of Class B stock to Class A stock (in shares)							2,060	(2,060)
Repurchase of treasury stock	(4,748)	(4,748)
Repurchase of treasury stock (in shares)							(165)
Common stock dividends	(11,724)			(11,724)
Conversions to common stock	32,242		32,240				2
Conversions to common stock (in shares)							2,183
Non-cash stock-based compensation	1,176		1,176
Other	(1,051)			(1,051)
Balance at Mar. 31, 2012	1,058,568	(69,796)	775,264	349,913	3,078		109
Balance (in shares) at Mar. 31, 2012							107,063
Balance at Dec. 31, 2012	882,039	(423,900)	810,094	492,687	3,047		111
Balance (in shares) at Dec. 31, 2012						99,244	99,244
Increase (Decrease) in Stockholders' Equity
Comprehensive income	72,046			72,643	(597)
Repurchase of treasury stock	(61,310)	(61,310)
Repurchase of treasury stock (in shares)							(1,504)
Common stock dividends	(14,760)			(14,760)
Conversions to common stock	9,055		9,055
Conversions to common stock (in shares)							450
Non-cash stock-based compensation	1,815		1,815
Balance at Mar. 31, 2013	$ 888,885	$ (485,210)	$ 820,964	$ 550,570	$ 2,450		$ 111
Balance (in shares) at Mar. 31, 2013						98,190	98,190

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COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Commitments and contingencies
Amount of future purchase commitments	$ 2.7
Product liability
Commitments and contingencies
Deductible/retention per claim out of total product liability insurance	4.0
Aggregate cap on retained loss for deductible/retention per claim out of total product liability insurance	10.0
Product liability | Hydroxycut Claims
Commitments and contingencies
Number of reports of liver injuries	23
Number of Hydroxycut-branded products recalled	14
Number of lawsuits filed against the company	93
Number of states in which lawsuits against the company are filed	14
Number of pending lawsuits in which company is named	73
Number of individual, largely personal injury claims pending	67
Number of putative class action cases pending against the company	6
Accrued contingent liability	$ 0

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GOODWILL AND INTANGIBLE ASSETS, NET (Tables)

3 Months Ended

Mar. 31, 2013

GOODWILL AND INTANGIBLE ASSETS, NET

Summary of goodwill activity

					Manufacturing/
	Retail		Franchising		Wholesale		Total
	(in thousands)
Balance at December 31, 2012	$	319,771	$	117,303	$	202,841	$	639,915
Acquired franchise stores	1,109		-		-		1,109
Balance at March 31, 2013 (unaudited)	$	320,880	$	117,303	$	202,841	$	641,024

Summary of intangible asset activity

	Retail		Franchise		Operating		Other
	Brand		Brand		Agreements		Intangibles		Total
	(in thousands)
Balance at December 31, 2012	$	500,000	$	220,000	$	132,317	$	9,400	$	861,717
Acquired franchise stores	-		-		-		186		186
Amortization expense	-		-		(1,663)		(457)		(2,120)
Balance at March 31, 2013 (unaudited)	$	500,000	$	220,000	$	130,654	$	9,129	$	859,783

Schedule of the gross carrying amount and accumulated amortization for each major intangible asset

	Weighted -	March 31, 2013						December 31, 2012
	Average			Accumulated		Carrying				Accumulated		Carrying
	Life	Cost		Amortization		Amount		Cost		Amortization		Amount
				(unaudited)
		(in thousands)
Brands - retail	-	$	500,000	$	-	$	500,000	$	500,000	$	-	$	500,000
Brands - franchise	-	220,000		-		220,000		220,000		-		220,000
Retail agreements	30.2	31,000		(6,512)		24,488		31,000		(6,249)		24,751
Franchise agreements	25.0	70,000		(16,917)		53,083		70,000		(16,217)		53,783
Manufacturing agreements	25.0	70,000		(16,917)		53,083		70,000		(16,217)		53,783
Other intangibles	11.4	10,600		(2,454)		8,146		10,600		(2,151)		8,449
Franchise rights	3.7	5,320		(4,337)		983		5,134		(4,183)		951
Total	24.5	$	906,920	$	(47,137)	$	859,783	$	906,734	$	(45,017)	$	861,717

Schedule of future estimated amortization expense of other intangible assets, net, with definite lives

	Estimated
	amortization
Years ending December 31,	expense
	(unaudited)
	(in thousands)
2013	$	6,330
2014	8,177
2015	8,034
2016	7,948
2017	7,898
Thereafter	101,396
Total	$	139,783

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STOCK-BASED COMPENSATION PLANS (Details) (USD $)	3 Months Ended
	Mar. 31, 2013 plan	Mar. 31, 2012
Stock-based compensation plans
Number of stock-based employee compensation plans	2
Non-cash stock-based compensation expense	$ 1,800,000	$ 1,200,000
Total unrecognized compensation cost related to non-vested stock awards	19,500,000
Weighted average period over which compensation cost is expected to be recognized	2 years
Stock option
Stock-based compensation plans
Total intrinsic value of awards exercised	13,800,000	55,900,000
Total amount of cash received from the exercise of options	4,300,000	13,500,000
Tax benefit associated with the exercise of awards recorded to additional capital	4,700,000	19,300,000
Total Options
Outstanding at the beginning of the period (in shares)	3,159,542
Granted (in shares)	10,017
Exercised (in shares)	(449,872)
Forfeited (in shares)	(16,667)
Outstanding at the end of the period (in shares)	2,703,020
Exercisable at the end of the period (in shares)	896,748
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 18.96
Granted (in dollars per share)	$ 42.19
Exercised (in dollars per share)	$ 9.34
Forfeited (in dollars per share)	$ 27.74
Outstanding at the end of the period (in dollars per share)	$ 20.60
Exercisable at the end of the period (in dollars per share)	$ 14.66
Weighted Average Remaining Contractual Term (In Years)
Outstanding at the end of the period	6 years 1 month 6 days
Exercisable at the end of the period	5 years 10 months 24 days
Aggregate Intrinsic Value
Outstanding at the end of the period	50,527,000
Exercisable at the end of the period	22,079,000
Weighted-average date fair values of options granted (in dollars per share)	$ 12.97	$ 9.89
Fair value of options vested	$ 1,000,000	$ 1,700,000
Stock option | Minimum
Stock-based compensation plans
Vesting period	4 years
Expiration period	7 years
Stock option | Maximum
Stock-based compensation plans
Vesting period	5 years
Expiration period	10 years
2011 Stock Plan | Class A common stock
Stock-based compensation plans
Number of shares authorized for issuance	8,500,000
Number of shares reserved for every share granted that are Full Share Awards	1.8
Number of shares available for grant for every share forfeited that are Full Share Awards	1.8
2007 Stock Plan
Stock-based compensation plans
Granted (in shares)	0

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FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2013

FINANCIAL INSTRUMENTS

Schedule of carrying amount and estimated fair values of the financial instruments

	March 31, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(unaudited)
	(in thousands)
Cash and cash equivalents	$	176,164	$	176,164	$	158,541	$	158,541
Receivables, net	137,659		137,659		129,641		129,641
Franchise notes receivable, net	8,174		8,174		7,589		7,589
Accounts payable	138,621		138,621		125,165		125,165
Long-term debt (including current portion)	1,097,746		1,105,979		1,098,562		1,101,309

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 72,643	$ 63,857
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	12,549	12,335
Amortization of debt costs	629	582
Increase in provision for inventory losses	3,993	2,797
Increase in receivables	(9,418)	(10,455)
Increase in inventory	(23,058)	(55,884)
Increase in prepaids and other current assets	(5,049)	(1,614)
Increase in accounts payable	13,256	37,473
Increase in deferred revenue and other current liabilities	27,599	19,221
Other operating activities	2,383	2,404
Net cash provided by operating activities	95,527	70,716
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(9,917)	(9,220)
Other investing activities	(682)	(1,388)
Net cash used in investing activities	(10,599)	(10,608)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to shareholders	(14,728)	(11,497)
Payments on long-term debt	(943)	(415)
Proceeds from exercised stock options	4,342	12,936
Tax benefit from exercise of stock options	5,086	20,625
Repurchase of treasury stock	(61,310)	(5,885)
Other financing activities		(2,500)
Net cash (used in) provided by financing activities	(67,553)	13,264
Effect of exchange rate on cash and cash equivalents	248	(236)
Net increase in cash and cash equivalents	17,623	73,136
Beginning balance, cash and cash equivalents	158,541	128,438
Ending balance, cash and cash equivalents	$ 176,164	$ 201,574

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Common stock, par value (in dollars per share)	0.001	0.001
Common stock, shares authorized	330,000	330,000
Class A Common Stock
Common stock, shares issued	112,176	111,725
Common stock, shares outstanding	98,190	99,244
Common stock, shares held in treasury	13,986	12,481

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INCOME TAXES

3 Months Ended

Mar. 31, 2013

INCOME TAXES

INCOME TAXES

NOTE 10.  INCOME TAXES

The Company recognized $40.9 million of income tax expense (or 36.0% of pre-tax income) during the three months ended March 31, 2013 compared to $37.8 million (or 37.2% of pre-tax income) for the same period in 2012.

The Company files a consolidated U.S. federal tax return and various consolidated and separate tax returns as prescribed by the tax laws of the state, local and international jurisdictions in which it operates. The Company’s 2010 federal income tax return is currently under examination by the Internal Revenue Service. The Company has various state and local jurisdiction tax years open to examination (the earliest open period is 2004), and the Company also has certain state and local jurisdictions currently under audit. As of March 31, 2013, the Company believes that it has appropriately reserved for potential federal and state income tax exposures.

At both March 31, 2013 and December 31, 2012, the Company had $12.9 million of unrecognized tax benefits. As of March 31, 2013, the Company is not aware of any tax positions for which it is reasonably possible that the amounts of unrecognized tax benefits will significantly increase or decrease within the next 12 months. The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is approximately $12.9 million. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company had accrued approximately $5.7 million at both March 31, 2013 and December 31, 2012 for potential interest and penalties associated with uncertain tax positions. To the extent interest and penalties are not assessed with respect to the ultimate settlement of uncertain tax positions, amounts previously accrued will be reduced and reflected as a reduction of the overall income tax provision.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	Apr. 26, 2013
Entity Registrant Name	GNC HOLDINGS, INC.
Entity Central Index Key	0001502034
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		98,319,365
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2013

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 11. RELATED PARTY TRANSACTIONS

Sponsors. Prior to the IPO, Holdings’ outstanding common stock was principally owned by the Sponsors. On March 19, 2012, OTPP converted all of its shares of Class B common stock into an equal number of shares of Class A common stock. As of December 31, 2012 Ares does not own any shares of the Company’s capital stock and OTPP owns less than 10,000 shares of the Company’s Class A common stock, and therefore the Sponsors are no longer considered related parties.

Lease Agreements. General Nutrition Centres Company, the Company’s wholly owned subsidiary, is a party, as lessee, to 16 lease agreements with Cadillac Fairview Corporation (“Cadillac Fairview”), as lessor, and 1 lease agreement with Ontrea, Inc. (“Ontrea”), as lessor, with respect to properties located in Canada.  Each of Cadillac Fairview and Ontrea is a direct wholly owned subsidiary of OTPP. For the three months ended March 31, 2012, the Company paid $0.7 million under the lease agreements with Cadillac Fairview, and an immaterial amount for the three months ended March 31, 2012 under the lease agreement with Ontrea. Each lease was negotiated in the ordinary course of business on an arm’s length basis.

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Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Consolidated Statements of Income
Revenue	$ 664,691	$ 624,272
Cost of sales, including cost of warehousing, distribution and occupancy	408,554	383,563
Gross profit	256,137	240,709
Compensation and related benefits	79,545	80,044
Advertising and promotion	20,440	16,219
Other selling, general and administrative	31,665	31,784
Foreign currency gain	(33)	(93)
Transaction related costs		686
Operating income	124,520	112,069
Interest expense, net (Note 5)	11,015	10,383
Income before income taxes	113,505	101,686
Income tax expense (Note 10)	40,862	37,829
Net income	$ 72,643	$ 63,857
Earnings per share:
Basic (in dollars per share)	$ 0.73	$ 0.60
Diluted (in dollars per share)	$ 0.73	$ 0.59
Weighted average common shares outstanding:
Basic (in shares)	98,997	105,805
Diluted (in shares)	99,861	107,746
Dividends declared per share:	$ 0.15	$ 0.11

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LONG-TERM DEBT / INTEREST EXPENSE

3 Months Ended

Mar. 31, 2013

LONG-TERM DEBT / INTEREST EXPENSE

LONG-TERM DEBT / INTEREST EXPENSE

NOTE 5.  LONG-TERM DEBT / INTEREST EXPENSE

Long-term debt consisted of the following:

	March 31,		December 31,
	2013		2012
	(unaudited)
	(in thousands)
Senior Credit Facility	$	1,095,739	$	1,096,112
Mortgage	2,003		2,444
Capital leases	4		6
Total debt	1,097,746		1,098,562
Less: current maturities	(3,816)		(3,817)
Long-term debt	$	1,093,930	$	1,094,745

For the three months ended March 31, 2013 and 2012, interest expense was $11.0 million and $10.4 million, respectively, and consisted primarily of interest on outstanding borrowings under the Term Loan Facility. Interest under both the Term Loan Facility and the Revolving Credit Facility is based on variable rates. At both March 31, 2013 and December 31, 2012, the interest rate under the Term Loan Facility was 3.75% and the interest rate under the Revolving Credit Facility was 3.00%. The Revolving Credit Facility was undrawn and had outstanding letters of credit of $1.1 million at both March 31, 2013 and December 31, 2012.

As of March 31, 2013, the Company believes that it is in compliance with all covenants under the Senior Credit Facility.

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GOODWILL AND INTANGIBLE ASSETS, NET

3 Months Ended

Mar. 31, 2013

GOODWILL AND INTANGIBLE ASSETS, NET

GOODWILL AND INTANGIBLE ASSETS, NET

NOTE 4. GOODWILL AND INTANGIBLE ASSETS, NET

For the three months ended March 31, 2013 and 2012, the Company acquired 7 and 13 franchise stores, respectively. These acquisitions were accounted for using the purchase method of accounting and the Company recorded the acquired inventory, fixed assets, franchise rights and goodwill, with an applicable reduction to receivables and cash. For the three months ended March 31, 2013 and 2012, the total purchase price associated with these acquisitions was $1.7 million and $2.6 million, respectively, of which $1.2 million and $1.1 million, respectively, was paid in cash.

The following table summarizes the Company’s goodwill activity:

					Manufacturing/
	Retail		Franchising		Wholesale		Total
	(in thousands)
Balance at December 31, 2012	$	319,771	$	117,303	$	202,841	$	639,915
Acquired franchise stores	1,109		-		-		1,109
Balance at March 31, 2013 (unaudited)	$	320,880	$	117,303	$	202,841	$	641,024

Intangible assets other than goodwill consisted of the following:

	Retail		Franchise		Operating		Other
	Brand		Brand		Agreements		Intangibles		Total
	(in thousands)
Balance at December 31, 2012	$	500,000	$	220,000	$	132,317	$	9,400	$	861,717
Acquired franchise stores	-		-		-		186		186
Amortization expense	-		-		(1,663)		(457)		(2,120)
Balance at March 31, 2013 (unaudited)	$	500,000	$	220,000	$	130,654	$	9,129	$	859,783

The following table reflects the gross carrying amount and accumulated amortization for each major intangible asset:

	Weighted -	March 31, 2013						December 31, 2012
	Average			Accumulated		Carrying				Accumulated		Carrying
	Life	Cost		Amortization		Amount		Cost		Amortization		Amount
				(unaudited)
		(in thousands)
Brands - retail	-	$	500,000	$	-	$	500,000	$	500,000	$	-	$	500,000
Brands - franchise	-	220,000		-		220,000		220,000		-		220,000
Retail agreements	30.2	31,000		(6,512)		24,488		31,000		(6,249)		24,751
Franchise agreements	25.0	70,000		(16,917)		53,083		70,000		(16,217)		53,783
Manufacturing agreements	25.0	70,000		(16,917)		53,083		70,000		(16,217)		53,783
Other intangibles	11.4	10,600		(2,454)		8,146		10,600		(2,151)		8,449
Franchise rights	3.7	5,320		(4,337)		983		5,134		(4,183)		951
Total	24.5	$	906,920	$	(47,137)	$	859,783	$	906,734	$	(45,017)	$	861,717

The following table represents future estimated amortization expense of intangible assets with finite lives at March 31, 2013:

	Estimated
	amortization
Years ending December 31,	expense
	(unaudited)
	(in thousands)
2013	$	6,330
2014	8,177
2015	8,034
2016	7,948
2017	7,898
Thereafter	101,396
Total	$	139,783

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LONG-TERM DEBT / INTEREST EXPENSE (Tables)

3 Months Ended

Mar. 31, 2013

LONG-TERM DEBT / INTEREST EXPENSE

Schedule of long-term debt

	March 31,		December 31,
	2013		2012
	(unaudited)
	(in thousands)
Senior Credit Facility	$	1,095,739	$	1,096,112
Mortgage	2,003		2,444
Capital leases	4		6
Total debt	1,097,746		1,098,562
Less: current maturities	(3,816)		(3,817)
Long-term debt	$	1,093,930	$	1,094,745

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2013

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 12. SUBSEQUENT EVENTS

On April 26, 2013, the board of directors authorized and declared a cash dividend for the second quarter of 2013 of $0.15 per share of Class A common stock, payable on or about June 28, 2013 to stockholders of record as of the close of business on June 14, 2013.

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STOCK-BASED COMPENSATION PLANS

3 Months Ended

Mar. 31, 2013

STOCK-BASED COMPENSATION PLANS

STOCK-BASED COMPENSATION PLANS

NOTE 8.  STOCK-BASED COMPENSATION PLANS

The Company has outstanding stock-based compensation awards that were granted by the Compensation Committee (the “Compensation Committee”) of Holdings’ board of directors under the following two stock-based employee compensation plans:

· the GNC Holdings, Inc. 2011 Stock and Incentive Plan (the “2011 Stock Plan”) adopted in March 2011; and

· the GNC Acquisition Holdings Inc. 2007 Stock Incentive Plan adopted in March 2007 (as amended, the “2007 Stock Plan”).

Both plans have provisions that allow for the granting of stock options, restricted stock and other stock based awards and are available to certain eligible employees, directors, consultants or advisors as determined by the Compensation Committee.  Stock options under the plans were granted with exercise prices at or above fair market value on the date of grant, typically vesting over a four-or five-year period, and expire seven or ten years from the date of grant.

Up to 8.5 million shares of Class A common stock may be issued under the 2011 Stock Plan (subject to adjustment to reflect certain transactions and events specified in the 2011 Stock Plan for any award grant). If any award granted under the 2011 Stock Plan expires, terminates or is cancelled without having been exercised in full, the number of shares underlying such unexercised award will again become available for awards under the 2011 Stock Plan. The total number of shares of Class A common stock available for awards under the 2011 Stock Plan will be reduced by (i) the total number of stock options or stock appreciation rights exercised, regardless of whether any of the shares of Class A common stock underlying such awards are not actually issued to the participant as the result of a net settlement, and (ii) any shares of Class A common stock used to pay any exercise price or tax withholding obligation. In addition, the number of shares of Class A common stock that are subject to restricted stock, performance shares or other stock-based awards that are not subject to the appreciation of the value of a share of Class A common stock (“Full Share Awards”) that may be granted under the 2011 Stock Plan is limited by counting shares granted pursuant to such awards against the aggregate share reserve as 1.8 shares for every share granted. If any stock option, stock appreciation right or other stock-based award that is not a Full Share Award is cancelled, expires or terminates unexercised for any reason, the shares covered by such awards will again be available for the grant of awards under the 2011 Stock Plan. If any shares of Class A common stock that are subject to restricted stock, performance shares or other stock-based awards that are Full Share Awards are forfeited for any reason, 1.8 shares of Class A common stock for each Full Share Award forfeited will again be available for the grant of awards under the 2011 Stock Plan.

The Company will not grant any additional awards under the 2007 Stock Plan.  No stock appreciation rights, restricted stock, deferred stock or performance shares were granted under the 2007 Stock Plan.

The Company utilizes the Black Scholes model to calculate the fair value of options under both the 2011 Stock Plan and the 2007 Stock Plan. The grant-date fair value of the Company’s restricted stock awards and restricted stock units is based on the closing price of a share of the Company’s common stock on the New York Stock Exchange on the date of the grant. The resulting compensation cost is recognized in the Company’s financial statements over the vesting period. The Company recognized $1.8 million and $1.2 million of total non-cash stock-based compensation expense for the three months ended March 31, 2013 and 2012, respectively. At March 31, 2013, there was approximately $19.5 million of total unrecognized compensation cost related to non-vested stock-based compensation for all awards previously made that are expected to be recognized over a weighted average period of approximately 2.0 years. All expense for the stock-based compensation plans is recorded to paid-in-capital.

During the three months ended March 31, 2013, the total intrinsic value of awards exercised was $13.8 million and the total amount received by Holdings from the exercise of options was $4.3 million. The tax impact associated with the exercise of awards for the three months ended March 31, 2013 was a benefit of $4.7 million, which was recorded to paid-in-capital.

During the three months ended March 31, 2012, the total intrinsic value of awards exercised was $55.9 million, and the total amount received by Holdings from the exercise of options was $13.5 million. The tax impact associated with the exercise of awards for the three months ended March 31, 2012 was a benefit of $19.3 million, which was recorded to paid-in-capital.

Stock Options

The following table sets forth a summary of stock options under all plans for the three months ended March 31, 2013:

				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
		Exercise		Contractual Term	Value (in
	Total Options	Price		(in years)	thousands)
Outstanding at December 31, 2012	3,159,542	$	18.96
Granted	10,017	42.19
Exercised	(449,872)	9.34
Forfeited	(16,667)	27.74
Outstanding at March 31, 2013	2,703,020	$	20.60	6.1	$	50,527
Exercisable at March 31, 2013	896,748	$	14.66	5.9	$	22,079

The weighted average fair value of options granted during the three months ended March 31, 2013 and 2012 was $12.97 and $9.89, respectively. Fair value of options vested during the three months ended March 31, 2013 and 2012 was $1.0 million and $1.7 million, respectively.

The Black Scholes model utilizes the following assumptions in determining a fair value: price of underlying stock, award exercise price, expected term, risk-free interest rate, expected dividend yield and expected stock price volatility over the award’s expected term. Due to the utilization of these assumptions, the existing models do not necessarily represent the definitive fair value of awards for future periods. As the IPO occurred during the second quarter of 2011, the option term has been estimated by considering both the vesting period, which typically for both plans has been four or five years, and the contractual term, which historically has been either seven or ten years. Prior to the IPO, the fair value of the Class A common stock was estimated based upon the net enterprise value of the Company, discounted to reflect the lack of liquidity and control associated with the stock.  Since the consummation of the IPO, the fair value of the Class A common stock has been based upon the closing price of the Class A common stock as reported on the New York Stock Exchange. Volatility is estimated based upon it’s the current peer group average utilized by the Company.

The assumptions used in the Company’s Black Scholes valuation related to stock option grants made during the three months ended March 31, 2013 were as follows:

Dividend yield	1.4%
Expected option life	4.8 years
Volatility factor percentage of market price	40.1%
Discount rate	0.9%

Restricted Stock Awards

The following table sets forth a summary of restricted stock awards granted under the 2011 Stock Plan and related information for the three months ended March 31, 2013:

		Weighted
		Average
	Restricted	Grant-Date
	Stock	Fair Value
Outstanding at December 31, 2012	123,941	$	24.24
Granted	5,526	40.64
Forfeited	(2,225)	29.06
Outstanding at March 31, 2013	127,242	$	24.87

No restricted stock awards vested during the three months ended March 31, 2013.

Restricted Stock Units – Time Vesting and Performance Vesting

Under the 2011 Stock Plan, the Company granted time vesting and performance vesting restricted stock units. Time vesting restricted stock units vest over a period of three years. Performance vesting restricted stock units vest based on the passage of time and the achievement of certain criteria; based on the extent to which the targets are achieved, vested shares may range from 0% to 200% of the original share amount. The unrecognized compensation cost related to the performance vesting restricted stock units is adjusted as necessary to reflect changes in the probability that the vesting criteria will be achieved.

The following table sets forth a summary of restricted stock units and performance stock units granted under the 2011 Stock Plan and related information for the three months ended March 31, 2013:

	Time	Weighted		Performance	Weighted
	Vesting	Average		Vesting	Average
	Restricted	Grant-Date		Restricted	Grant-Date
	Stock Units	Fair Value		Stock Units	Fair Value
Outstanding at December 31, 2012	171,937	$	36.16	-	$	-
Granted	7,622	41.52		45,327	42.19
Outstanding at March 31, 2013	179,559	$	36.39	45,327	$	42.19

No time vesting or performance vesting shares vested during the three months ended March 31, 2013.

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FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2013

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

NOTE 6.  FINANCIAL INSTRUMENTS

At March 31, 2013 and December 31, 2012, the Company’s financial instruments consisted of cash and cash equivalents, receivables, franchise notes receivable, accounts payable, certain accrued liabilities and long-term debt. The carrying amount of cash and cash equivalents, receivables, accounts payable and accrued liabilities approximates their respective fair values because of the short maturities of these instruments. Based on the interest rates currently available and their underlying risk, the carrying value of the franchise notes receivable approximates their respective fair values. These fair values are reflected net of reserves for uncollectible amounts. As considerable judgment is required to determine these estimates and assumptions, changes in the assumptions or methodologies may have an effect on these estimates. The Company determined the estimated fair values of its debt by using currently available market information. The fair value of debt is classified as a Level 2 category on the fair value hierarchy, as defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The actual and estimated fair values of the Company’s financial instruments are as follows:

	March 31, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(unaudited)
	(in thousands)
Cash and cash equivalents	$	176,164	$	176,164	$	158,541	$	158,541
Receivables, net	137,659		137,659		129,641		129,641
Franchise notes receivable, net	8,174		8,174		7,589		7,589
Accounts payable	138,621		138,621		125,165		125,165
Long-term debt (including current portion)	1,097,746		1,105,979		1,098,562		1,101,309

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2013

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 7.  COMMITMENTS AND CONTINGENCIES

Litigation

The Company is engaged in various legal actions, claims and proceedings resulting from the Company’s business activities arising in the normal course of business, including claims related to breach of contracts, products liabilities, intellectual property matters and employment-related matters resulting from the Company’s business activities. As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. The Company continues to assess the requirement to account for additional contingencies in accordance with the standard on contingencies. If the Company is required to make a payment in connection with an adverse outcome in these matters, it could have a material impact on the Company’s business, financial condition, results of operations or cash flows.

As a manufacturer and retailer of nutritional supplements and other consumer products that are ingested by consumers or applied to their bodies, the Company has been and is currently subjected to various product liability claims. Although the effects of these claims to date have not been material to the Company, it is possible that current and future product liability claims could have a material adverse impact on its business or financial condition, results of operations, or cash flows. The Company currently maintains product liability insurance with a deductible/retention of $4.0 million per claim with an aggregate cap on retained loss of $10.0 million. The Company typically seeks and has obtained contractual indemnification from most parties that supply raw materials for its products or that manufacture or market products it sells. The Company also typically seeks to be added, and has been added, as an additional insured under most of such parties’ insurance policies. The Company is also entitled to indemnification by Numico for certain losses arising from claims related to products containing ephedra or Kava Kava sold prior to December 5, 2003. However, any such indemnification or insurance is limited by its terms and any such indemnification, as a practical matter, is limited to the creditworthiness of the indemnifying party and its insurer, and the absence of significant defenses by the insurers. The Company may incur material product liability claims, which could increase its costs and adversely affect its reputation, revenue and operating income.

Hydroxycut Claims. On May 1, 2009, the FDA issued a warning on several Hydroxycut-branded products manufactured by Iovate Health Sciences U.S.A., Inc. (“Iovate”). The FDA warning was based on 23 reports of liver injuries from consumers who claimed to have used the products between 2002 and 2009. As a result, Iovate voluntarily recalled 14 Hydroxycut-branded products.

Following the recall, the Company was named, among other defendants, in approximately 93 lawsuits related to Hydroxycut-branded products in 14 states.  Iovate previously accepted the Company’s tender request for defense and indemnification under its purchasing agreement with the Company and, as such, Iovate has accepted the Company’s request for defense and indemnification in the Hydroxycut matters. The Company’s ability to obtain full recovery in respect of any claims against the Company in connection with products manufactured by Iovate under the indemnity is dependent on Iovate’s insurance coverage, the creditworthiness of its insurer, and the absence of significant defenses by such insurer.  To the extent the Company is not fully compensated by Iovate’s insurer, it can seek recovery directly from Iovate.  The Company’s ability to fully recover such amounts may be limited by the creditworthiness of Iovate.

As of March 31, 2013, there were 73 pending lawsuits related to Hydroxycut in which the Company has been named: 67 individual, largely personal injury claims and six putative class action cases, generally inclusive of claims of consumer fraud, misrepresentation, strict liability and breach of warranty.  In 2009, the United States Judicial Panel on Multidistrict Litigation consolidated pretrial proceedings of many of the pending actions in the Southern District of California (In re: Hydroxycut Marketing and Sales Practices Litigation, MDL No. 2087).  The parties in the consolidated class actions have reached a settlement, and the settlement has been preliminarily approved by the Court.  The parties’ motion for final approval of the settlement was heard on April 23, 2013.  The Company is not required to make any payments under the settlement.

As any liabilities that may otherwise arise from Hydroxycut claims against the Company are not probable or reasonably estimable at this time, no liability has been accrued in the accompanying financial statements.

Commitments

In addition to operating leases obtained in the normal course of business, the Company maintains certain purchase commitments with various vendors to ensure its operational needs are fulfilled.  As of March 31, 2013, such future purchase commitments consisted of $2.7 million.  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 or financial condition.

Environmental Compliance

In March 2008, the South Carolina Department of Health and Environmental Control (the “DHEC”) requested that the Company investigate contamination associated with historical activities at its South Carolina facility. These investigations have identified chlorinated solvent impacts in soils and groundwater that extend offsite from the facility. The Company entered into a Voluntary Cleanup Contract with the DHEC regarding the matter on September 24, 2012. Pursuant to that contract, the Company is working under the DHEC’s supervision to complete additional investigations to characterize the contamination. After the Company completes the investigations to understand the extent of the chlorinated solvent impacts, the Company will develop appropriate remedial measures for DHEC approval. At this stage of the investigation, however, it is not possible to estimate the timing and extent of any remedial action that may be required, the ultimate cost of remediation, or the amount of the Company’s potential liability.

In addition to the foregoing, the Company is subject to numerous federal, state, local and foreign environmental and health and safety laws and regulations governing its operations, including the handling, transportation and disposal of the Company’s non-hazardous and hazardous substances and wastes, as well as emissions and discharges from its operations into the environment, including discharges to air, surface water and groundwater. Failure to comply with these laws and regulations could result in costs for remedial actions, penalties or the imposition of other liabilities.  New laws, changes in existing laws or the interpretation thereof, or the development of new facts or changes in their processes could also cause the Company to incur additional capital and operating expenditures to maintain compliance with environmental laws and regulations and environmental permits. The Company is also subject to laws and regulations that impose liability and cleanup responsibility for releases of hazardous substances into the environment without regard to fault or knowledge about the condition or action causing the liability. Under certain of these laws and regulations, such liabilities can be imposed for cleanup of previously owned or operated properties, or for properties to which substances or wastes that were sent in connection with current or former operations at its facilities. The presence of contamination from such substances or wastes could also adversely affect the Company’s ability to sell or lease its properties, or to use them as collateral for financing. From time to time, the Company has incurred costs and obligations for correcting environmental and health and safety noncompliance matters and for remediation at or relating to certain of the Company’s properties or properties at which the Company’s waste has been disposed. However, compliance with the provisions of national, state and local environmental laws and regulations has not had a material effect upon the Company’s capital expenditures, earnings, financial position, liquidity or competitive position. The Company believes it has complied with, and is currently complying with, its environmental obligations pursuant to environmental and health and safety laws and regulations and that any liabilities for noncompliance will not have a material adverse effect on its business, financial performance or cash flows. However, it is difficult to predict future liabilities and obligations, which could be material.

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SEGMENTS

3 Months Ended

Mar. 31, 2013

SEGMENTS

SEGMENTS

NOTE 9.  SEGMENTS

The Company has three reportable segments, each of which represents an identifiable component of the Company for which separate financial information is available. This information is utilized by management to assess performance and allocate assets accordingly. The Company’s management evaluates segment operating results based on several indicators. The primary key performance indicators are sales and operating income or loss for each segment. Operating income or loss, as evaluated by management, excludes certain items that are managed at the consolidated level, such as distribution and warehousing, impairments and other corporate costs. The Retail reportable segment includes the Company’s corporate store operations in the United States, Canada and Puerto Rico and its GNC.com and LuckyVitamin.com businesses. The Franchise reportable segment represents the Company’s franchise operations, both domestically and internationally. The Manufacturing/Wholesale reportable segment represents the Company’s manufacturing operations in South Carolina and the Wholesale sales business. This segment supplies the Retail and Franchise segments, along with various third parties, with finished products for sale. The Warehousing and Distribution and Corporate costs represent the Company’s administrative expenses. The accounting policies of the segments are the same as those described in the “Basis of Presentation and Summary of Significant Accounting Policies.”

The following table represents key financial information of the Company’s segments:

	Three months ended March 31,
	2013		2012
	(unaudited)
	(in thousands)
Revenue:
Retail	$	493,467	$	469,821
Franchise	107,887		101,484
Manufacturing/Wholesale:
Intersegment revenues	65,470		66,508
Third Party	63,337		52,967
Subtotal Manufacturing/Wholesale	128,807		119,475
Subtotal segment revenues	730,161		690,780
Elimination of intersegment revenues	(65,470)		(66,508)
Total revenue	$	664,691	$	624,272
Operating income:
Retail	$	98,583	$	93,176
Franchise	38,425		34,428
Manufacturing/Wholesale	22,926		22,837
Unallocated corporate and other costs:
Warehousing and distribution costs	(16,355)		(15,795)
Corporate costs	(19,059)		(21,891)
Transaction related costs	-		(686)
Subtotal unallocated corporate and other costs	(35,414)		(38,372)
Total operating income	$	124,520	$	112,069

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FINANCIAL INSTRUMENTS (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Carrying Amount
Actual and estimated fair values of the financial instruments
Cash and cash equivalents	$ 176,164	$ 158,541
Receivables, net	137,659	129,641
Franchise notes receivable, net	8,174	7,589
Accounts payable	138,621	125,165
Long-term debt (including current portion)	1,097,746	1,098,562
Fair Value
Actual and estimated fair values of the financial instruments
Cash and cash equivalents	176,164	158,541
Receivables, net	137,659	129,641
Franchise notes receivable, net	8,174	7,589
Accounts payable	138,621	125,165
Long-term debt (including current portion)	$ 1,105,979	$ 1,101,309

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INVENTORIES (Tables)

3 Months Ended

Mar. 31, 2013

INVENTORIES

Schedule of net carrying value of inventories

	March 31,		December 31,
	2013		2012
	(unaudited)
	(in thousands)
Finished product ready for sale	$	427,837	$	415,096
Work-in-process, bulk product and raw materials	75,982		70,022
Packaging supplies	6,900		6,481
Total	$	510,719	$	491,599

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SEGMENTS (Tables)

3 Months Ended

Mar. 31, 2013

SEGMENTS

Schedule of key financial information of the segments

	Three months ended March 31,
	2013		2012
	(unaudited)
	(in thousands)
Revenue:
Retail	$	493,467	$	469,821
Franchise	107,887		101,484
Manufacturing/Wholesale:
Intersegment revenues	65,470		66,508
Third Party	63,337		52,967
Subtotal Manufacturing/Wholesale	128,807		119,475
Subtotal segment revenues	730,161		690,780
Elimination of intersegment revenues	(65,470)		(66,508)
Total revenue	$	664,691	$	624,272
Operating income:
Retail	$	98,583	$	93,176
Franchise	38,425		34,428
Manufacturing/Wholesale	22,926		22,837
Unallocated corporate and other costs:
Warehousing and distribution costs	(16,355)		(15,795)
Corporate costs	(19,059)		(21,891)
Transaction related costs	-		(686)
Subtotal unallocated corporate and other costs	(35,414)		(38,372)
Total operating income	$	124,520	$	112,069

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SUBSEQUENT EVENTS (Details) (USD $)	3 Months Ended		0 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Apr. 26, 2013 Subsequent event Dividend declared Class A Common Stock
Subsequent events
Dividends declared per share: (in dollars per share)	$ 0.15	$ 0.11	$ 0.15

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Consolidated Statements of Comprehensive Income
Net income	$ 72,643	$ 63,857
Other comprehensive income:
Foreign currency translation adjustments	(597)	354
Other comprehensive income	(597)	354
Comprehensive income	$ 72,046	$ 64,211

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INVENTORIES

3 Months Ended

Mar. 31, 2013

INVENTORIES

INVENTORIES

NOTE 3.  INVENTORIES

The net carrying value of inventories consisted of the following:

	March 31,		December 31,
	2013		2012
	(unaudited)
	(in thousands)
Finished product ready for sale	$	427,837	$	415,096
Work-in-process, bulk product and raw materials	75,982		70,022
Packaging supplies	6,900		6,481
Total	$	510,719	$	491,599

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NATURE OF BUSINESS (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended			1 Months Ended					3 Months Ended	0 Months Ended		0 Months Ended
	Mar. 31, 2013 item	Dec. 31, 2012	Dec. 31, 2012 Ares	Nov. 30, 2012 Class A Common Stock	Aug. 31, 2012 Class A Common Stock	Mar. 31, 2012 Class A Common Stock	Oct. 31, 2011 Class A Common Stock	Apr. 30, 2011 Class A Common Stock	Mar. 31, 2013 Class A Common Stock item	Oct. 12, 2012 Term Loan Facility	Mar. 31, 2011 Term Loan Facility	Aug. 01, 2012 Incremental Term Loan	Mar. 31, 2011 Revolving Credit Facility	Mar. 31, 2013 Minimum item	Dec. 31, 2012 Minimum Class A Common Stock OTPP
General nature of business and recent significant transactions
Number of primary segments	3
Number of international countries in which franchise stores are located														50
Recent Significant Transactions
Issuance of common stock (in shares)								25,900,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001						$ 0.001
IPO price of share (in dollars per share)								$ 16.00
Maximum borrowing capacity											$ 1,200.0		$ 80.0
Increase in outstanding borrowings												200.0
Description of variable interest rate										LIBOR
Interest rate floor (as a percent)										1.00%
Applicable margin (as a percent)										2.75%
Number of shares offered by stockholders				11,700,000	10,000,000	19,600,000	23,000,000
Price of shares offered by stockholders (in dollars per share)				$ 35.20	$ 38.42	$ 33.50	$ 24.75
Number of shares repurchased					6,000,000
Number of stockholders from whom stock is repurchased									1
Amount of shares repurchased									61.3
Amount of shares authorized to repurchase									$ 250.0
Number of shares of common stock owned by related party			0												10,000

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SEGMENTS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 item	Mar. 31, 2012
SEGMENTS
Number of reportable segments	3
Segments
Total revenue	$ 664,691	$ 624,272
Sub total segment revenues	730,161	690,780
Operating income	124,520	112,069
Transaction related costs		(686)
Retail
Segments
Total revenue	493,467	469,821
Operating income	98,583	93,176
Franchise
Segments
Total revenue	107,887	101,484
Operating income	38,425	34,428
Manufacturing/Wholesale
Segments
Intersegment revenues	65,470	66,508
Third Party	63,337	52,967
Sub total segment revenues	128,807	119,475
Operating income	22,926	22,837
Elimination of intersegment revenues
Segments
Intersegment revenues	(65,470)	(66,508)
Warehousing and distribution
Segments
Warehousing and distribution costs	(16,355)	(15,795)
Unallocated corporate and other costs:
Segments
Corporate costs	(19,059)	(21,891)
Transaction related costs		(686)
Sub total unallocated corporate and other costs	$ (35,414)	$ (38,372)

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2013

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Principles of Consolidation. The consolidated financial statements include the accounts of Holdings and all of its subsidiaries. All material intercompany transactions have been eliminated in consolidation.

The Company has no relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off balance sheet arrangements, or other contractually narrow or limited purposes.

Use of Estimates

Use of Estimates.  The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Accordingly, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Some of the most significant estimates pertaining to the Company include the valuation of inventories, the allowance for doubtful accounts and income taxes. On a regular basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.

Transaction Related Cost

Transaction Related Costs.  The Company recognizes transaction related costs as expenses in the period incurred.  For the three months ended March 31, 2013, the Company incurred no transaction related costs. For the three months ended March 31, 2012, the Company incurred $0.7 million of expenses related to the March 2012 offering.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (the “FASB”) issued an accounting standard regarding the reclassification of amounts out of accumulated other comprehensive income (“AOCI”).  This standard does not change the current requirements for reporting net income or other comprehensive income. However, the standard requires disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement of operations or in the footnotes to the financial statements. Amounts that are not required to be reclassified in their entirety to net income must be cross-referenced to other disclosures that provide additional detail. This guidance is effective for fiscal years beginning after December 15, 2012. The Company adopted this guidance during the first quarter of 2013. The adoption of this guidance had no material impact on the Company’s consolidated financial statements.