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 June 30, 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 July 26, 2013, there were 95,296,359 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 June 30, 2013 (unaudited) and December 31, 2012	1
	Unaudited Consolidated Statements of Income for the three and six months ended June 30, 2013 and 2012	2
	Unaudited Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2013 and 2012	2
	Unaudited Consolidated Statements of Stockholders’ Equity for the six months ended June 30, 2013 and 2012	3
	Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 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	26
Item 4.	Controls and Procedures	27
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	29
Signatures		30

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

GNC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, including share data)

	June 30,			December 31,
	2013			2012
Current assets:	(unaudited)
Cash and cash equivalents	$	64,025		$	158,541
Receivables, net	142,104			129,641
Inventories (Note 3)	544,299			491,599
Prepaids and other current assets	40,989			39,016
Total current assets	791,417			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)	137,748			141,717
Property, plant and equipment, net	199,683			199,487
Other long-term assets	32,787			32,124
Total long-term assets	1,731,242			1,733,243
Total assets	$	2,522,659		$	2,552,040
Current liabilities:
Accounts payable	$	157,867		$	125,165
Current portion, long-term debt (Note 5)	3,557			3,817
Deferred revenue and other current liabilities	103,346			116,337
Total current liabilities	264,770			245,319
Long-term liabilities:
Long-term debt (Note 5)	1,093,366			1,094,745
Deferred tax liabilities, net	283,886			283,203
Other long-term liabilities	49,580			46,734
Total long-term liabilities	1,426,832			1,424,682
Total liabilities	1,691,602			1,670,001
Stockholders’ equity:
Common stock, $0.001 par value, 300,000 shares authorized:
Class A, 112,339 shares issued and 95,678 shares outstanding and 16,661 shares held in treasury at June 30, 2013 and 111,725 shares issued and 99,244 shares outstanding and 12,481 shares held in treasury at December 31, 2012	112			111
Paid-in-capital	826,535			810,094
Retained earnings	607,878			492,687
Treasury stock, at cost	(605,210		)	(423,900		)
Accumulated other comprehensive income	1,742			3,047
Total stockholders’ equity	831,057			882,039
Total liabilities and stockholders’ equity	$	2,522,659		$	2,552,040

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

1

GNC HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(unaudited)

(in thousands, except per share data)

	Three months ended June 30,					Six months ended June 30,
	2013			2012		2013			2012
Revenue	$	676,276		$	619,081	$	1,340,966		$	1,243,354
Cost of sales, including cost of warehousing, distribution and occupancy	420,384			379,644		828,937			763,208
Gross profit	255,892			239,437		512,029			480,146
Compensation and related benefits	81,104			78,376		160,649			158,419
Advertising and promotion	16,282			13,411		36,722			29,630
Other selling, general and administrative	34,917			30,573		66,582			62,358
Foreign currency gain	(82		)	17		(115		)	(76		)
Transaction related costs	-			-		-			686
Operating income	123,671			117,060		248,191			229,129
Interest expense, net (Note 5)	11,101			10,495		22,116			20,878
Income before income taxes	112,570			106,565		226,075			208,251
Income tax expense (Note 10)	40,882			39,894		81,744			77,723
Net income	$	71,688		$	66,671	$	144,331		$	130,528
Income per share - Basic and Diluted:
Earnings per share:
Basic	$	0.74		$	0.63	$	1.47		$	1.23
Diluted	$	0.73		$	0.62	$	1.46		$	1.21
Weighted average common shares outstanding:
Basic	97,428			106,517		98,208			106,161
Diluted	98,333			107,927		99,106			107,917
Dividends declared per share:	$	0.15		$	0.11	$	0.30		$	0.22

Consolidated Statements of Comprehensive Income

(unaudited)

(in thousands)

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
Net income	$	71,688		$	66,671		$	144,331		$	130,528
Other comprehensive loss:
Foreign currency translation adjustments	(708		)	(580		)	(1,305		)	(226		)
Other comprehensive loss	(708		)	(580		)	(1,305		)	(226		)
Comprehensive income	$	70,980		$	66,091		$	143,026		$	130,302

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	-		-		-		-			-			-		144,331			(1,305		)	143,026
Repurchase of treasury stock	(4,180	)	-		-		-			(181,310		)	-		-			-			(181,310		)
Common stock dividends	-		-		-		-			-			-		(29,140		)	-			(29,140		)
Conversions to common stock	614		1		-		-			-			12,567		-			-			12,568
Non-cash stock-based compensation	-		-		-		-			-			3,874		-			-			3,874
Balance at June 30, 2013 (unaudited)	95,678		$	112	-		$	-		$	(605,210	)	$	826,535	$	607,878		$	1,742		$	831,057
Balance at December 31, 2011	102,985		$	105	2,060		$	2		$	(65,048	)	$	741,848	$	298,831		$	2,724		$	978,462
Comprehensive income	-		-		-		-			-			-		130,528			(226		)	130,302
Conversion of Class B stock to Class A stock	2,060		2		(2,060	)	(2		)	-			-		-			-			-
Repurchase of treasury stock	(1,665	)	-		-		-			(58,822		)	-		-			-			(58,822		)
Common stock dividends	-		-		-		-			-			-		(23,409		)	-			(23,409		)
Conversions to common stock	2,938		3		-		-			-			47,100		-			-			47,103
Non-cash stock-based compensation	-		-		-		-			-			2,320		-			-			2,320
Other	-		-		-		-			-			-		(1,051		)	-			(1,051		)
Balance at June 30, 2012 (unaudited)	106,318		$	110	-		$	-		$	(123,870	)	$	791,268	$	404,899		$	2,498		$	1,074,905

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)

	Six months ended June 30,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	144,331		$	130,528
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	25,131			24,329
Amortization of debt costs	1,258			1,166
Increase in provision for inventory losses	8,990			6,554
Increase in receivables	(13,948		)	(15,049		)
Increase in inventory	(61,874		)	(90,642		)
(Increase) decrease in prepaids and other current assets	(1,997		)	1,699
Increase in accounts payable	32,449			34,475
(Decrease) increase in deferred revenue and other current liabilities	(13,250		)	1,384
Other operating activities	5,742			(1,578		)
Net cash provided by operating activities	126,832			92,866
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(21,475		)	(20,838		)
Other investing activities	(1,194		)	(1,895		)
Net cash used in investing activities	(22,669		)	(22,733		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to shareholders	(29,078		)	(23,409		)
Payments on long-term debt	(1,893		)	(833		)
Proceeds from exercised stock options	6,280			19,540
Tax benefit from exercise of stock options	6,970			28,903
Repurchase of treasury stock	(181,310		)	(59,960		)
Other financing activities	-			(2,500		)
Net cash used in financing activities	(199,031		)	(38,259		)
Effect of exchange rate on cash and cash equivalents	352			(145		)
Net (decrease) increase in cash and cash equivalents	(94,516		)	31,729
Beginning balance, cash and cash equivalents	158,541			128,438
Ending balance, cash and cash equivalents	$	64,025		$	160,167

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

4

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”). In March 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 June 30, 2013, the Company had completed $181.3 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”). In August 2012, the Credit Agreement was amended to increase the outstanding borrowings by $200.0 million.  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%.

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 six months ended June 30, 2013, the Company incurred no transaction related costs. For the six months ended June 30, 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:

	June 30,		December 31,
	2013		2012
	(unaudited)
	(in thousands)
Finished product ready for sale	$	455,539	$	415,096
Work-in-process, bulk product and raw materials	81,314		70,022
Packaging supplies	7,446		6,481
Total	$	544,299	$	491,599

6

NOTE 4. GOODWILL AND INTANGIBLE ASSETS, NET

For the six months ended June 30, 2013 and 2012, the Company acquired 11 and 17 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 six months ended June 30, 2013 and 2012, the total purchase price associated with these acquisitions was $2.0 million and $3.4 million, respectively, of which $1.2 million and $1.6 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 June 30, 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	-		-		-			202			202
Amortization expense	-		-		(3,326		)	(845		)	(4,171		)
Balance at June 30, 2013 (unaudited)	$	500,000	$	220,000	$	128,991		$	8,757		$	857,748

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

	Weighted -	June 30, 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		(6,775		)	24,225		31,000		(6,249		)	24,751
Franchise agreements	25.0	70,000		(17,617		)	52,383		70,000		(16,217		)	53,783
Manufacturing agreements	25.0	70,000		(17,617		)	52,383		70,000		(16,217		)	53,783
Other intangibles	11.4	10,600		(2,757		)	7,843		10,600		(2,151		)	8,449
Franchise rights	3.7	5,335		(4,421		)	914		5,134		(4,183		)	951
Total	24.5	$	906,935	$	(49,187	)	$	857,748	$	906,734	$	(45,017	)	$	861,717

7

The following table represents future estimated amortization expense of intangible assets with finite lives at June 30, 2013:

	Estimated
	amortization
Years ending December 31,	expense
	(unaudited)
	(in thousands)
2013	$	4,336
2014	8,155
2015	8,003
2016	7,934
2017.	7,885
Thereafter	101,435
Total	$	137,748

NOTE 5.  LONG-TERM DEBT / INTEREST EXPENSE

Long-term debt consisted of the following:

	June 30,			December 31,
	2013			2012
	(unaudited)
	(in thousands)
Senior Credit Facility	$	1,095,366		$	1,096,112
Mortgage	1,554			2,444
Capital leases	3			6
Total debt	1,096,923			1,098,562
Less: current maturities	(3,557		)	(3,817		)
Long-term debt	$	1,093,366		$	1,094,745

For the six months ended June 30, 2013 and 2012, interest expense was $22.1 million and $20.9 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 June 30, 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 June 30, 2013 and December 31, 2012.

As of June 30, 2013, the Company believes that it is in compliance with all covenants under the Senior Credit Facility.

8

NOTE 6.  FINANCIAL INSTRUMENTS

At June 30, 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:

	June 30, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(unaudited)
	(in thousands)
Cash and cash equivalents	$	64,025	$	64,025	$	158,541	$	158,541
Receivables, net	142,104		142,104		129,641		129,641
Franchise notes receivable, net	8,101		8,101		7,589		7,589
Accounts payable	157,867		157,867		125,165		125,165
Long-term debt (including current portion)	1,096,923		1,091,438		1,098,562		1,101,309

NOTE 7.  COMMITMENTS AND CONTINGENCIES

The Company is engaged in various legal actions, claims and proceedings 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.  The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, the Company does not establish an accrued liability.  Currently, none of the Company’s accruals for outstanding legal matters are material individually or in the aggregate to the Company’s financial position. However, if the Company ultimately is required to make a payment in connection with an adverse outcome in any of the matters discussed below, it is possible that it could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

The Company’s contingencies are subject to substantial uncertainties, including for each such contingency the following, among other factors: (i) the procedural status of the case; (ii) whether the case has or may be certified as a class action suit; (iii) the outcome of preliminary motions; (iv) the impact of discovery; (v) whether there are significant factual issues to be determined or resolved; (vi) whether the proceedings involve a large number of parties and/or parties and claims in multiple jurisdictions or jurisdictions in which the relevant laws are complex or unclear; (vii) the extent of potential damages, which are often unspecified or indeterminate; and (viii) the status of settlement discussions, if any, and the settlement posture of the parties.  Consequently, except as otherwise noted below with regard to a particular matter, the Company cannot predict with any reasonable certainty the timing or outcome of the legal matters described below, and the Company is unable to estimate a possible loss or range of loss.

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. Consequently, the Company may incur material product liability claims, which could increase its costs and adversely affect its reputation, revenue and operating income.

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Litigation

Hydroxycut Claims. In 2009, the FDA issued a warning on several Hydroxycut-branded products manufactured by Iovate Health Sciences U.S.A., Inc. (“Iovate”) 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, including a number of putative class action cases, related to Hydroxycut-branded products in 14 states.  Iovate accepted the Company’s tender request for defense and indemnification under its purchasing agreement in these matters.

As of June 30, 2013, there were 73 pending lawsuits related to Hydroxycut in which the Company has been named, including 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. 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 reached a settlement, which was preliminarily approved by the Court. There are two objectors to the settlement.  The parties’ motion for final approval of the settlement was heard on April 23, 2013. The judge indicated at the hearing that he would grant final approval of the settlement, but ordered the objectors to appear at an evidentiary hearing, which was held on July 16, 2013, to provide evidence of their standing to object to the settlement. The Court has not yet issued its decision with respect to the matters addressed at the July 16th hearing.  The Company is not required to make any payments under the settlement agreement.

In May 2013, the parties to the individual personal injury cases signed a Master Settlement Agreement, under which the Company is not required to make any payments. After the Master Settlement Agreement was signed, a new case was filed against Iovate and several other defendants, including the Company, in Alabama state court. Iovate is working to include this case into the master settlement.  Assuming that this most recently filed case is included in the Master Settlement Agreement, and following final court approval of the Master Settlement Agreement pertaining to the individual personal injury cases and the settlement of the consolidated class action suits, all of the Hydroxycut claims currently pending against the Company will be resolved without any payment by the Company.

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 June 30, 2013, such future purchase commitments consisted of $2.8 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.

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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.

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 vest 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.

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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 $3.9 million and $2.3 million of total non-cash stock-based compensation expense for the six months ended June 30, 2013 and 2012, respectively. At June 30, 2013, there was approximately $17.3 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 1.9 years. All expense for the stock-based compensation plans is recorded to paid-in-capital.

During the six months ended June 30, 2013, the total intrinsic value of awards exercised was $18.7 million and the total amount received by Holdings from the exercise of options was $6.3 million. The total tax impact associated with the exercise of awards for the six months ended June 30, 2013 was a benefit of $7.0 million, of which $6.3 million was recorded to paid-in-capital.

During the six months ended June 30, 2012, the total intrinsic value of awards exercised was $78.5 million, and the total amount received by Holdings from the exercise of options was $19.5 million. The total tax impact associated with the exercise of awards for the six months ended June 30, 2012 was a benefit of $28.9 million, of which $27.0 million was recorded to paid-in-capital.

Stock Options

The following table sets forth a summary of stock options under all plans for the six months ended June 30, 2013:

	Total Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2012	3,159,542	$	18.96
Granted	20,808	43.73
Exercised	(600,892)	10.20
Forfeited	(61,241)	26.42
Outstanding at June 30, 2013	2,518,217	$	21.07	5.9	$	58,260
Exercisable at June 30, 2013	892,644	$	15.55	5.5	$	25,587

The weighted average fair value of options granted during the six months ended June 30, 2013 and 2012 was $14.01 and $9.89, respectively. Fair value of options vested during the six months ended June 30, 2013 and 2012 was $2.0 million and $2.9 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 the current peer group average utilized by the Company.

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The assumptions used in the Company’s Black Scholes valuation related to stock option grants made during the six months ended June 30, 2013 were as follows:

Dividend yield	1.4%
Expected option life	4.8 years
Volatility factor percentage of market price	40.1% - 40.5%
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 six months ended June 30, 2013:

	Restricted Stock	Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2012	123,941	$	24.24
Granted	18,497	44.15
Vested	(12,736)	39.74
Forfeited	(7,553)	23.43
Outstanding at June 30, 2013	122,149	$	25.69

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 six months ended June 30, 2013:

	Time Vesting Restricted Stock Units	Weighted Average Grant-Date Fair Value		Performance Vesting Restricted Stock Units	Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2012	171,937	$	36.16	-	$	-
Granted	10,664	42.67		45,327	42.19
Forfeited	(6,907)	38.30		(1,379)	42.19
Outstanding at June 30, 2013	175,694	$	36.47	43,948	$	42.19

No time vesting or performance vesting shares vested during the six months ended June 30, 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 June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(unaudited)
	(in thousands)
Revenue:
Retail	$	502,490	$	458,632	$	995,957	$	928,453
Franchise	110,560		103,539		218,446		205,024
Manufacturing/Wholesale:
Intersegment revenues	67,546		70,609		133,017		137,118
Third Party	63,226		56,910		126,563		109,877
Subtotal Manufacturing/Wholesale	130,772		127,519		259,580		246,995
Subtotal segment revenues	743,822		689,690		1,473,983		1,380,472
Elimination of intersegment revenues	(67,546)		(70,609)		(133,017)		(137,118)
Total revenue	$	676,276	$	619,081	$	1,340,966	$	1,243,354
Operating income:
Retail	$	100,344	$	97,617	$	198,927	$	190,792
Franchise	36,650		32,290		75,075		66,719
Manufacturing/Wholesale	25,507		23,858		48,434		46,695
Unallocated corporate and other costs:
Warehousing and distribution costs	(16,869)		(15,625)		(33,224)		(31,420)
Corporate costs	(21,961)		(21,080)		(41,021)		(42,971)
Transaction related costs	-		-		-		(686)
Subtotal unallocated corporate and other costs	(38,830)		(36,705)		(74,245)		(75,077)
Total operating income	123,671		117,060		248,191		229,129
Interest expense, net	11,101		10,495		22,116		20,878
Income before income taxes	$	112,570	$	106,565	$	226,075	$	208,251

NOTE 10.  INCOME TAXES

The Company recognized $81.7 million of income tax expense (or 36.2% of pre-tax income) during the six months ended June 30, 2013 compared to $77.7 million (or 37.3% 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 June 30, 2013, the Company believes that it has appropriately reserved for potential federal and state income tax exposures.

At both June 30, 2013 and December 31, 2012, the Company had $12.9 million of unrecognized tax benefits. As of June 30, 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 $5.3 million and $5.7 million at June 30, 2013 and December 31, 2012, respectively, 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. In March 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 did not own any shares of the Company’s capital stock and OTPP owned 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.  Cadillac Fairview and Ontrea are direct wholly owned subsidiaries of OTPP. For the six months ended June 30, 2012, the Company paid $1.2 million under the lease agreements with Cadillac Fairview, and an immaterial amount for the six months ended June 30, 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 July 18, 2013, the board of directors authorized and declared a cash dividend for the third quarter of 2013 of $0.15 per share of Class A common stock, payable on or about September 27, 2013 to stockholders of record as of the close of business on September 13, 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 8,300 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 June 30, 2013, we have completed $181.3 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”). In August 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 June 30, 2013 compared to the same period in 2012:

·Our company-owned domestic same store sales increased by 4.0%, which includes a 27.5% increase from our GNC.com business.

·We increased our company-owned domestic store count by 44 net new stores during the second quarter of 2013.

·     Our retail segment sales increased by 9.6%, and operating income increased 2.8%.

·Total franchising revenue grew 6.8%, and operating income increased 13.5%.

·Domestic franchising revenue grew 5.2%, and we added 11 net new domestic franchise stores during the second quarter of 2013.

·International franchise revenue grew 9.2%, and we added 65 net new international franchise stores during the second quarter of 2013.

·We increased our sales in our wholesale/manufacturing segment by 11.1% through our wholesale distribution channels and increased third-party sales, and operating income increased 6.9%.

·We generated 9.2% of total revenue growth which drove a 5.6% increase in total operating income.

·We completed the rollout of the new Gold Card Member Pricing program to all stores nationwide and GNC.com, which evolved the Gold Card from a fixed 20% discount the first week of each month to an everyday variable discount Member Pricing model.

·For the six months ended June 30, 2013, we generated net cash from operating activities of $126.8 million, repurchased $181.3 million in common stock, and paid $29.1 million in common stock dividends.

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 franchisee stores. 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.

·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.

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A significant portion of our business infrastructure is comprised of fixed operating costs. Our vertically integrated distribution network, manufacturing capacity, and our ability to outsource production can support higher sales volume without significant incremental costs.

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 and six months ended June 30, 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 June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(unaudited)
Revenues:
Retail	$	502.5	74.3%	$	458.7	74.1%	$	996.0	74.3%	$	928.5	74.7%
Franchise	110.6		16.4%	103.5		16.7%	218.4		16.3%	205.0		16.5%
Manufacturing / Wholesale	63.2		9.3%	56.9		9.2%	126.6		9.4%	109.9		8.8%
Total net revenues	676.3		100.0%	619.1		100.0%	1,341.0		100.0%	1,243.4		100.0%
Operating expenses:
Cost of sales, including warehousing, distribution and occupancy costs	420.4		62.2%	379.6		61.3%	829.0		61.8%	763.2		61.4%
Compensation and related benefits	81.1		12.0%	78.4		12.7%	160.6		12.0%	158.4		12.7%
Advertising and promotion	16.3		2.4%	13.4		2.2%	36.7		2.7%	29.6		2.4%
Other selling, general and administrative expenses	32.8		4.8%	28.5		4.6%	62.4		4.7%	58.2		4.7%
Transaction related costs	-		0.0%	-		0.0%	-		0.0%	0.7		0.1%
Amortization expense	2.1		0.3%	2.1		0.3%	4.2		0.3%	4.3		0.3%
Foreign currency gain	(0.1)		0.0%	-		0.0%	(0.1)		0.0%	(0.1)		0.0%
Total operating expenses	552.6		81.7%	502.0		81.1%	1,092.8		81.5%	1,014.3		81.6%
Operating income:
Retail	100.3		14.8%	97.6		15.8%	198.9		14.8%	190.8		15.3%
Franchise	36.7		5.4%	32.3		5.2%	75.1		5.6%	66.7		5.4%
Manufacturing / Wholesale	25.5		3.8%	23.9		3.9%	48.4		3.6%	46.7		3.8%
Unallocated corporate and other costs:
Warehousing and distribution costs	(16.9)		-2.5%	(15.6)		-2.6%	(33.2)		-2.5%	(31.4)		-2.5%
Corporate costs	(21.9)		-3.2%	(21.1)		-3.4%	(41.0)		-3.0%	(43.0)		-3.5%
Transaction related costs	-		0.0%	-		0.0%	-		0.0%	(0.7)		-0.1%
Subtotal unallocated corporate and other costs, net	(38.8)		-5.7%	(36.7)		-6.0%	(74.2)		-5.5%	(75.1)		-6.1%
Total operating income	123.7		18.3%	117.1		18.9%	248.2		18.5%	229.1		18.4%
Interest expense, net	11.1			10.5			22.1			20.9
Income before income taxes	112.6			106.6			226.1			208.2
Income tax expense	40.9			39.9			81.8			77.7
Net income	$	71.7		$	66.7		$	144.3		$	130.5

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 June 30, 2013 and 2012

Revenues

Our consolidated net revenues increased $57.2 million, or 9.2%, to $676.3 million for the three months ended June 30, 2013 compared to $619.1 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 $43.8 million, or 9.6%, to $502.5 million for the three months ended June 30, 2013 compared to $458.7 million for the same period in 2012. Domestic retail revenue increased $37.6 million due to the opening of new stores of approximately $11.8 million and a 4.0% increase in our same store sales, which includes an increase in sales from GNC.com of $6.8 million, or 27.5%, to $31.7 million for the three months ended June 30, 2013, compared to $24.9 million for the same period in 2012. The nationwide rollout of Member Pricing included the giveaway of free Gold Cards, which negatively impacted same store sales. In addition, sales from LuckyVitamin.com contributed $1.4 million to the increase in revenue. Canadian sales increased by $4.8 million in U.S. dollars for the three months ended June 30, 2013 compared to the same period in 2012. Our company-owned store base increased by 147 domestic stores to 3,097 at June 30, 2013 compared to 2,950 at June 30, 2012, due to new store openings and franchise store acquisitions. Our Canadian store base increased by 4 stores to 168 at June 30, 2013 compared to 164 at June 30, 2012.

Franchise. Revenues in our Franchise segment increased $7.1 million, or 6.8%, to $110.6 million for the three months ended June 30, 2013 compared to $103.5 million for the same period in 2012. Domestic franchise revenues increased $3.3 million primarily due to higher product sales. Our domestic franchise same store sales increased by 4.2% for the three months ended June 30, 2013 compared to the same period in 2012. There were 969 domestic franchise stores at June 30, 2013 compared to 933 stores at June 30, 2012. International revenue increased by $3.8 million, or 9.2%, for the three months ended June 30, 2013, compared to the same period in 2012, primarily as a result of higher product sales. Our franchisees have reported a 12.7% same store sales increase this year, on a local currency basis. Our international franchise store base increased by 275 stores to 1,926 at June 30, 2013 compared to 1,651 at June 30, 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 $6.3 million, or 11.1%, to $63.2 million for the three months ended June 30, 2013 compared to $56.9 million for the same period in 2012. Wholesale revenue increased $6.4 million, or 25.2%, 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 $40.8 million, or 10.7%, to $420.4 million for the three months ended June 30, 2013 compared to $379.6 million for the same period in 2012. Cost of sales, as a percentage of net revenue, was 62.2% and 61.3% for the three months ended June 30, 2013 and 2012, respectively. The higher cost of sales increase for the three months ended June 30, 2013 was due to planned pricing investments with the rollout of Member Pricing.

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 $9.9 million, or 8.1%, to $132.3 million for the three months ended June 30, 2013 compared to $122.4 million for the same period in 2012. These expenses, as a percentage of net revenue, were 19.6% for the three months ended June 30, 2013 compared to 19.8% for the three months ended June 30, 2012.

Compensation and related benefits. Compensation and related benefits increased $2.7 million, or 3.5%, to $81.1 million for the three months ended June 30, 2013 compared to $78.4 million for the same period in 2012. The increase in compensation and related benefits was primarily due to support for our increased store base and sales volume.

Advertising and promotion. Advertising and promotion expenses increased $2.9 million, or 21.4%, to $16.3 million for the three months ended June 30, 2013 compared to $13.4 million for the same period in 2012. The increase in advertising expense resulted primarily from our investment in the nationwide launch of Member Pricing during the quarter.

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Other SG&A. Other SG&A expenses, including amortization expense, increased $4.3 million, or 14.2%, to $34.9 million for the three months ended June 30, 2013 compared to $30.6 million for the same period in 2012. This increase was to support increased sales in each of our segments.

Operating Income

As a result of the foregoing, consolidated operating income increased $6.6 million, or 5.6%, to $123.7 million for the three months ended June 30, 2013 compared to $117.1 million for the same period in 2012. Operating income, as a percentage of net revenue, was 18.3% and 18.9% for the three months ended June  30, 2013 and 2012, respectively.

Retail. Operating income increased $2.7 million, or 2.8%, to $100.3 million for the three months ended June 30, 2013 compared to $97.6 million for the same period in 2012. The increase in operating income was driven by the same store sales increase offset by planned investments in marketing and pricing with the nationwide rollout of Member Pricing.

Franchise. Operating income increased $4.4 million, or 13.5%, to $36.7 million for the three months ended June 30, 2013 compared to $32.3 million for the same period in 2012. The increase was due to increased wholesale product sales and royalty income.

Manufacturing/Wholesale. Operating income increased $1.6 million, or 6.9%, to $25.5 million for the three months ended June 30, 2013 compared to $23.9 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 $1.3 million, or 8.0%, to $16.9 million for the three months ended June 30, 2013 compared to $15.6 million for the same period in 2012. The increase was primarily due to increased shipping expense and wages to support higher sales volume.

Corporate costs. Corporate overhead costs increased $0.8 million, or 4.2%, to $21.9 million for the three months ended June 30, 2013 compared to $21.1 million for the same period in 2012. This increase was due to increases in compensation expenses and other SG&A costs.

Interest Expense

Interest expense increased $0.6 million, or 5.8%, to $11.1 million for the three months ended June 30, 2013 compared to $10.5 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 36.3% of pre-tax income) during the three months ended June 30, 2013 compared to $39.9 million (or 37.4% of pre-tax income) for the same period in 2012. The income tax rate was lower for the three months ended June 30, 2013 compared to the same period in 2012 as a result of federal incentives and changes to tax reserves.

Net Income

As a result of the foregoing, consolidated net income increased $5.0 million to $71.7 million for the three months ended June 30, 2013 compared to $66.7 million for the same period in 2012.

Comparison of the Six Months Ended June 30, 2013 and 2012

Revenues

Our consolidated net revenues increased $97.6 million, or 7.9%, to $1,341.0 million for the six months ended June 30, 2013 compared to $1,243.4 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 $67.5 million, or 7.3%, to $996.0 million for the six months ended June 30, 2013 compared to $928.5 million for the same period in 2012. Domestic retail revenue increased $56.3 million due to the opening of new stores of approximately $19.5 million and a 2.9% increase in our same store sales, which includes an increase in sales from GNC.com of $11.5 million, or 22.2%, to $63.4 million for the six months ended June 30, 2013, compared to $51.9 million for the same period in 2012. The nationwide rollout of Member Pricing included the giveaway of free Gold Cards, which negatively impacted same store sales. In addition, sales from LuckyVitamin.com contributed $2.5 million to the increase in revenue. Canadian sales increased by $8.7 million in U.S. dollars for the six months ended June 30, 2013 compared to the same period in 2012. Our company-owned store base increased by 147 domestic stores to 3,097 at June 30, 2013 compared to 2,950 at June 30, 2012, due to new store openings and franchise store acquisitions. Our Canadian store base increased by 4 stores to 168 at June 30, 2013 compared to 164 at June 30, 2012.

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Franchise. Revenues in our Franchise segment increased $13.4 million, or 6.5%, to $218.4 million for the six months ended June 30, 2013 compared to $205.0 million for the same period in 2012. Domestic franchise revenues increased $5.9 million primarily due to higher product sales. Our domestic franchise same store sales increased by 3.7% for the six months ended June 30, 2013 compared to the same period in 2012. There were 969 domestic franchise stores at June 30, 2013 compared to 933 stores at June 30, 2012.  International revenue increased by $7.5 million, or 9.5%, for the six months ended June 30, 2013, compared to the same period in 2012, primarily as a result of higher product sales. Our franchisees have reported a 10.4% same store sales increase for the six months ended June 30, 2013, on a local currency basis. Our international franchise store base increased by 275 stores to 1,926 at June 30, 2013 compared to 1,651 at June 30, 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 $16.7 million, or 15.2%, to $126.6 million for the six months ended June 30, 2013 compared to $109.9 million for the same period in 2012. For the six months ended June 30, 2013, third-party contract manufacturing sales from our South Carolina manufacturing plant increased by $3.4 million, or 5.4%, compared to the same period in 2012. In addition, wholesale revenue increased $13.3 million or 28.1% 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 $65.8 million, or 8.6%, to $829.0 million for the six months ended June 30, 2013 compared to $763.2 million for the same period in 2012. Cost of sales, as a percentage of net revenue, was 61.8% and 61.4% for the six months ended June 30, 2013 and 2012, respectively. The higher cost of sales increase for the six months ended June 30, 2013 was due to planned pricing investments with the rollout of Member Pricing.

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 $12.8 million, or 5.1%, to $264.0 million for the six months ended June 30, 2013 compared to $251.2 million for the same period in 2012. These expenses, as a percentage of net revenue, were 19.7% for the six months ended June 30, 2013 compared to 20.2% for the six months ended June 30, 2012.

Compensation and related benefits. Compensation and related benefits increased $2.2 million, or 1.4%, to $160.6 million for the six months ended June 30, 2013 compared to $158.4 million for the same period in 2012. The increase in compensation and related benefits was primarily due to support for our increased store base and sales volume.

Advertising and promotion. Advertising and promotion expenses increased $7.1 million, or 23.9%, to $36.7 million for the six months ended June 30, 2013 compared to $29.6 million for the same period in 2012. The increase in advertising expense resulted primarily from increases in media and print expense with the launch of the “Respect Yourself” campaign and our investment in the nationwide launch of Member Pricing.

Other SG&A. Other SG&A expenses, including amortization expense, increased $4.1 million, or 6.6%, to $66.6 million for the six months ended June 30, 2013 compared to $62.5 million for the same period in 2012. This increase was to support increased sales in each of our segments.

Transaction related costs. We did not incur any transaction related costs for the six months ended June 30, 2013.  For the six months ended June 30, 2012, we incurred $0.7 million related to the March 2012 offering.

Operating Income

As a result of the foregoing, consolidated operating income increased $19.1 million, or 8.3%, to $248.2 million for the six months ended June 30, 2013 compared to $229.1 million for the same period in 2012. Operating income, as a percentage of net revenue, was 18.5% and 18.4% for the six months ended June 30, 2013 and 2012, respectively.

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Retail. Operating income increased $8.1 million, or 4.3%, to $198.9 million for the six months ended June 30, 2013 compared to $190.8 million for the same period in 2012. The increase in operating income was driven by the same store sales increase offset by planned investments in marketing spend and pricing during the second quarter with the nationwide rollout of Member Pricing and in support of the “Respect Yourself” marketing campaign launch in the first quarter.

Franchise. Operating income increased $8.4 million, or 12.5%, to $75.1 million for the six months ended June 30, 2013 compared to $66.7 million for the same period in 2012. The increase was due to increased wholesale product sales and royalty income.

Manufacturing/Wholesale. Operating income increased $1.7 million, or 3.7%, to $48.4 million for the six months ended June 30, 2013 compared to $46.7 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 $1.8 million, or 5.7%, to $33.2 million for the six months ended June 30, 2013 compared to $31.4 million for the same period in 2012. The increase was primarily due to increased shipping expense and wages to support higher sales volume.

Corporate costs. Corporate overhead costs decreased -$2.0 million, or -4.6%, to $41.0 million for the six months ended June 30, 2013 compared to $43.0 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 six months ended June 30, 2013.  For the six months ended June 30, 2012, we incurred $0.7 million related to the March 2012 offering.

Interest Expense

Interest expense increased $1.2 million, or 5.9%, to $22.1 million for the six months ended June 30, 2013 compared to $20.9 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 $81.8 million of income tax expense (or 36.2% of pre-tax income) during the six months ended June 30, 2013 compared to $77.7 million (or 37.3% of pre-tax income) for the same period in 2012. The income tax rate was lower for the six months ended June 30, 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, federal incentives and changes to tax reserves.

Net Income

As a result of the foregoing, consolidated net income increased $13.8 million to $144.3 million for the six months ended June 30, 2013 compared to $130.5 million for the same period in 2012.

Liquidity and Capital Resources

At June 30, 2013, we had $64.0 million in cash and cash equivalents and $526.6 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 $46.9 million decrease in our working capital was primarily driven by a decrease in our cash due to the repurchase of common stock and an increase in accounts payable, partially offset by an increase in receivables and inventory levels to support increased sales in each of our segments.

We expect to fund our operations through internally generated cash and, if necessary, from borrowings under the Revolving Credit Facility.  At June 30, 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.

In February 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 $181.3 million of Class A common stock during the six months ended June 30, 2013.

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On July 18, 2013, the board of directors authorized and declared a cash dividend for the third quarter of 2013 of $0.15 per share of Class A common stock, payable on or about September 30, 2013 to stockholders of record as of the close of business on September 13, 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 $126.8 million and $92.9 million for the six months ended June 30, 2013 and 2012, respectively. The increase was due to an increase in net income of $13.8 million and the timing of payments for inventory, accounts payable, and deferred revenue and other current liabilities for the six months ended June 30, 2013 compared to the same period in 2012.

For the six months ended June 30, 2013, inventory increased $61.9 million as a result of increases in our finished goods to support our increased sales. Accounts receivables increased $13.9 million as a result of increased sales to our franchisees. Accounts payable increased $32.4 million due to the increase in inventory and timing of payments. Deferred revenue and other current liabilities decreased $13.3 million due primarily to a decrease in accrued taxes and accrued payroll.

Cash Used in Investing Activities

Cash used in investing activities was $22.7 million for both the six months ended June 30, 2013 and 2012. Capital expenditures, which were primarily for new stores and improvements to our retail stores and our South Carolina manufacturing facility, were $21.5 million and $20.8 million for the six months ended June 30, 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.

Cash Used in Financing Activities

For the six months ended June 30, 2013, cash used in financing activities was $199.0 million, primarily consisting of dividends paid to Holdings’ stockholders of $29.1 million and the repurchase of an aggregate of $181.3 million shares of Class A common stock under the repurchase program, offset by $13.3 million of proceeds from exercised stock options, including the associated tax benefit.

For the six months ended June 30, 2012, cash used in financing activities was $38.3 million, primarily due to dividends paid to Holdings’ stockholders of $23.4 million and the repurchase of an aggregate of $60.0 million shares of Class A common stock under a repurchase program, offset partially by $48.4 million of proceeds from exercised stock options, including the associated tax benefit.

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.

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Off Balance Sheet Arrangements

As of June 30, 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 our 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 June 30, 2013, an increase of 1% in the interest rates would cause our annual interest rate costs to increase by approximately $2.1 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.

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 six months ended June 30, 2013 and 2012.

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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 June 30, 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.

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Part II - OTHER INFORMATION

Item 1.   Legal Proceedings

We are engaged in various legal actions, claims and proceedings 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 our business activities.  We record accruals for outstanding legal matters when we believe it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated.  We evaluate, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable.  If a loss contingency is not both probable and estimable, we do not establish an accrued liability.  Currently, none of our accruals for outstanding legal matters are material individually or in the aggregate to the our financial position.  However, if we ultimately are required to make a payment in connection with an adverse outcome in any of the matters discussed below, it is possible that it could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Our contingencies are subject to substantial uncertainties, including for each such contingency the following, among other factors: (i) the procedural status of the case; (ii) whether the case has or may be certified as a class action suit; (iii) the outcome of preliminary motions; (iv) the impact of discovery; (v) whether there are significant factual issues to be determined or resolved; (vi) whether the proceedings involve a large number of parties and/or parties and claims in multiple jurisdictions or jurisdictions in which the relevant laws are complex or unclear; (vii) the extent of potential damages, which are often unspecified or indeterminate; and (viii) the status of settlement discussions, if any, and the settlement posture of the parties.  Consequently, except as otherwise noted below with regard to a particular matter, we cannot predict with any reasonable certainty the timing or outcome of the legal matters described below, and we are unable to estimate a possible loss or range of loss.

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. In 2009, the FDA issued a warning on several Hydroxycut-branded products manufactured by Iovate Health Sciences U.S.A., Inc. (“Iovate”) 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, we were named, among other defendants, in approximately 93 lawsuits, including a number of putative class action cases, related to Hydroxycut-branded products in 14 states.  Iovate accepted our tender request for defense and indemnification under the purchasing agreement in these matters.

As of June 30, 2013, there were 73 pending lawsuits related to Hydroxycut in which we have been named, including 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.  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 reached a settlement, which was preliminarily approved by the Court. There are two objectors to the settlement.  The parties’ motion for final approval of the settlement was heard on April 23, 2013. The judge indicated at the hearing that he would grant final approval of the settlement, but ordered the objectors to appear at an evidentiary hearing, which was held on July 16, 2013, to provide evidence of their standing to object to the settlement. The Court has not yet issued its decision with respect to the matters addressed at the July 16th hearing.  We are not required to make any payments under the settlement agreement.

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In May 2013, the parties to the individual personal injury cases signed a Master Settlement Agreement, under which we are not required to make any payments. After the Master Settlement Agreement was signed, a new case was filed against Iovate and several other defendants, including us, in Alabama state court. Iovate is working to include this case into the master settlement. Assuming that this most recently filed case is included in the Master Settlement Agreement, and following final court approval of the Master Settlement Agreement pertaining to the individual personal injury cases and the settlement of the consolidated class action suits, all of the Hydroxycut claims currently pending against us will be resolved without any payment.

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.

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 June 30, 2013:

	Total Number of Shares Purchased (1)		Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased under the Plans or Programs
April 1 to April 30, 2013		-	-		-	$  188,690,297
May 1 to May 31, 2013		1,533,322	45.41		1,533,322	$  119,062,478
June 1 to June 30, 2013		1,142,003	44.11		1,142,003	$    68,690,298
Total		2,675,325	$  44.85		2,675,325

(1)In February 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 June 30, 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
3.1	Amended and Restated Certificate of Incorporation of Holdings, as filed with the Delaware Secretary of State on May 24, 2013.*
3.2	Fifth Amended and Restated Bylaws of Holdings, as currently in effect. (Incorporated by reference to Exhibit 3.1 to Holdings’ Current Report on Form 8-K (File No. 001-35113), filed October 23, 2012).
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
*	Filed herewith.

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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: August 1, 2013	Joseph M. Fortunato
	President and Chief Executive Officer
	(Principal Executive Officer)
	/s/ Michael M. Nuzzo
Date: August 1, 2013	Michael M. Nuzzo
	Chief Financial Officer
	(Principal Financial Officer)

	/s/ Andrew S. Drexler
Date: August 1, 2013	Andrew S. Drexler
	Corporate Controller
	(Principal Accounting Officer)

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EX-3.1

Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

GNC HOLDINGS, INC.

GNC Holdings, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:

(1)The Corporation’s original certificate of incorporation was filed with the Secretary of State of the State of Delaware on February 5, 2007, under the name GNC Acquisition Holdings Inc. (as amended from time to time, the “Certificate of Incorporation”).

(2)This Amended and Restated Certificate of Incorporation was duly adopted by the Board of Directors of the Corporation (the “Board of Directors”) in accordance with Sections 141, 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”).

(3)The required holders of the Corporation’s issued and outstanding capital stock approved and adopted this Amended and Restated Certificate of Incorporation in accordance with Sections 228, 242 and 245 of the DGCL.

(4)References made herein and in the bylaws of the Corporation to the Certificate of Incorporation are to this Amended and Restated Certificate of Incorporation.

(5)This Amended and Restated Certificate of Incorporation restates and integrates and amends the certificate of incorporation of the Corporation, as heretofore amended and supplemented.

(6)The Certificate of Incorporation of the Corporation is hereby amended and restated in its entirety to read as follows:

ARTICLE FIRST.  The name of the corporation is GNC HOLDINGS, INC. (the “Corporation”).

ARTICLE SECOND.  The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle.  The name of its registered agent at such address is The Corporation Trust Company.

ARTICLE THIRD.  The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.

ARTICLE FOURTH.  The total number of shares of all classes of stock that the Corporation shall have authority to issue is 360,000,000 of which 300,000,000 shares of the par value of $0.001 per share shall be designated Class A Common Stock (“Common Stock”), and 60,000,000 shares of the par value of $0.001 per share shall be designated as Preferred Stock.

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ARTICLE FIFTH.  The following is a statement of the designations, preferences, qualifications, limitations, restrictions granted to or imposed upon the shares of Common Stock.

(a)        Dividends.  Holders of Common Stock shall be entitled to receive ratably on a per share basis such dividends as may be declared by the Board of Directors.

(b)        Distribution of Assets.  Upon the occurrence of the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, holders of Common Stock shall be entitled to receive all of the remaining assets of the Corporation available after payments to creditors and to the holders of any Preferred Stock of the Corporation that may at the time be outstanding, in proportion to the number of shares held by them.

(c)        Voting Rights.  The holders of Common Stock shall have the general right to vote for all purposes, including the election or removal of directors, as provided by law.  Each holder of Common Stock shall be entitled to one vote for each share thereof held. There shall be no cumulative voting.

(d)        No Preemptive or Subscription Rights.  No holder of shares of Common Stock shall be entitled to preemptive or subscription rights.

ARTICLE SIXTH.  Shares of Preferred Stock may be issued in one or more series, from time to time, with each such series to consist of such number of shares and to have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, as shall be stated in the resolution or resolutions providing for the issuance of such series adopted by the Board of Directors, and the Board of Directors is hereby expressly vested with the authority, to the full extent now or hereafter provided by law, to adopt any such resolution or resolutions. The authority of the Board of Directors with respect to each series of Preferred Stock shall include, but not be limited to, determination of the following:

(a)        The number of shares constituting that series and the distinctive designation of that series;

(b)        The dividend rate or rates on the shares of that series, the terms and conditions upon which and the periods in respect of which dividends shall be payable, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of that series;

(c)        Whether that series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights;

(d)        Whether that series shall have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the board of directors shall determine;

(e)        Whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in the event of redemption, which amount may vary under different conditions and at different redemption dates;

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(f)        Whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund;

(g)        The rights of the shares of that series in the event of voluntary or involuntary liquidation, distribution of assets, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment of shares of that series; and

(h)        Any other relative rights, powers, and preferences, and the qualifications, limitations and restrictions thereof, of that series.

Each holder of Common Stock, as such, shall be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to the Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to the Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) or pursuant to the DGCL.

ARTICLE SEVENTH.  The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

(a)        Business and Affairs.  The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.

(b)        Number of Directors; Vacancies and Newly Created Directorships. The Board of Directors shall consist of not less than seven nor more than fifteen members, the exact number of which shall be fixed from time to time by resolution adopted by the affirmative vote of a majority of the entire Board of Directors. Subject to the previous sentence and except as otherwise required by law and subject to the rights of the holders of any series of stock with respect to such series of stock, unless the Board of Directors otherwise determines, newly created directorships resulting from any increase in the authorized number of directors or any vacancies on the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled only by a majority vote of the directors then in office, though less than a quorum, or by a sole remaining director, and not by the stockholders.  Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his or her predecessor.

3

(c)        Annual Meetings.  Each annual meeting of stockholders of the Corporation shall be held on such date, which date shall be within thirteen (13) months of the last annual meeting of stockholders, and at such time as shall be designated by the Board of Directors and announced by the Corporation.

ARTICLE EIGHTH.  No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL as the same exists or may hereafter be amended. If the DGCL is amended hereafter to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent authorized by the DGCL, as so amended. Any repeal or modification of this ARTICLE EIGHTH by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification.

ARTICLE NINTH.  Any action required or permitted to be taken by the stockholders of the Corporation may be effected at a duly called annual or special meeting of stockholders of the Corporation, or may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. The Secretary of the Corporation shall file such consent or consents, or certify the tabulation of such consents and file such certificate, with the minutes of the meetings of the stockholders.

ARTICLE TENTH.  The Corporation shall indemnify its directors to the fullest extent authorized or permitted by law, as now or hereafter in effect, and such right to indemnification shall continue as to a person who has ceased to be a director of the Corporation and shall inure to the benefit of his or her heirs, executors and personal and legal representatives; provided, that, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any director (or his or her heirs, executors or personal or legal representatives) in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors.  The right to indemnification conferred by this ARTICLE TENTH shall include the right to be paid by the Corporation the expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition.

The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to officers, employees and agents of the Corporation similar to those conferred in this ARTICLE TENTH to the Board of Directors.

The rights to indemnification and to the advancement of expenses conferred in this ARTICLE TENTH shall not be exclusive of any other right which any person may have or hereafter acquire under the Certificate of Incorporation, the bylaws of the Corporation (the “Bylaws”), any statute, agreement, vote of stockholders or disinterested directors or otherwise.

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Any repeal or modification of this ARTICLE TENTH by the stockholders of the Corporation shall not adversely affect any rights to indemnification and to the advancement of expenses of a director or officer of the Corporation existing at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification.

ARTICLE ELEVENTH.  In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power to adopt, amend, alter or repeal the Bylaws. The affirmative vote of at least a majority of the entire Board of Directors shall be required to adopt, amend, alter or repeal the Bylaws.  The Bylaws may also be adopted, amended, altered or repealed by the affirmative vote of the holders of at least a majority of the voting power of the shares entitled to vote.  In addition to the powers and authority herein or by statute expressly conferred upon them, the Board of Directors is hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject to the provisions of the DGCL, the Certificate of Incorporation and the Bylaws; provided, that no bylaws hereafter adopted by the stockholders shall invalidate any prior act of the directors that would have been valid if such bylaws had not been adopted.

ARTICLE TWELFTH.  Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide.  The books of the Corporation may be kept (subject to any provision contained in the DGCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws.

ARTICLE THIRTEENTH.  Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim arising pursuant to any provision of the DGCL, or (d) any action asserting a claim governed by the internal affairs doctrine, in each such case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.  Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this ARTICLE THIRTEENTH.

ARTICLE FOURTEENTH.  The Corporation reserves the right to amend, alter, change or repeal any provision contained in the Certificate of Incorporation in the manner now or hereafter prescribed in the Certificate of Incorporation, the Bylaws or the DGCL, and all rights herein conferred upon stockholders are granted subject to such reservation; provided, however, that, notwithstanding any other provision of the Certificate of Incorporation (and in addition to any other vote that may be required by law), the affirmative vote of the holders of at least 66-2/3% of the voting power of the shares entitled to vote shall be required to amend, alter, change or repeal, or to adopt any provision as part of the Certificate of Incorporation inconsistent with the purpose and intent of ARTICLES SEVENTH and EIGHTH of the Certificate of Incorporation or this ARTICLE FOURTEENTH.

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IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be executed on its behalf this 24th day of May, 2013.

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

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: August 1, 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: August 1, 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 June 30, 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:	August 1, 2013
/s/ Michael M. Nuzzo
Name:	Michael M. Nuzzo
Title:	Chief Financial Officer
	(Principal Financial Officer)
Date:	August 1, 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

6 Months Ended

Jun. 30, 2013

INCOME TAXES

INCOME TAXES

NOTE 10.  INCOME TAXES

The Company recognized $81.7 million of income tax expense (or 36.2% of pre-tax income) during the six months ended June 30, 2013 compared to $77.7 million (or 37.3% 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 June 30, 2013, the Company believes that it has appropriately reserved for potential federal and state income tax exposures.

At both June 30, 2013 and December 31, 2012, the Company had $12.9 million of unrecognized tax benefits. As of June 30, 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 $5.3 million and $5.7 million at June 30, 2013 and December 31, 2012, respectively, 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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Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Consolidated Statements of Income
Revenue	$ 676,276	$ 619,081	$ 1,340,966	$ 1,243,354
Cost of sales, including cost of warehousing, distribution and occupancy	420,384	379,644	828,937	763,208
Gross profit	255,892	239,437	512,029	480,146
Compensation and related benefits	81,104	78,376	160,649	158,419
Advertising and promotion	16,282	13,411	36,722	29,630
Other selling, general and administrative	34,917	30,573	66,582	62,358
Foreign currency gain	(82)	17	(115)	(76)
Transaction related costs				686
Operating income	123,671	117,060	248,191	229,129
Interest expense, net (Note 5)	11,101	10,495	22,116	20,878
Income before income taxes	112,570	106,565	226,075	208,251
Income tax expense (Note 10)	40,882	39,894	81,744	77,723
Net income	$ 71,688	$ 66,671	$ 144,331	$ 130,528
Earnings per share:
Basic (in dollars per share)	$ 0.74	$ 0.63	$ 1.47	$ 1.23
Diluted (in dollars per share)	$ 0.73	$ 0.62	$ 1.46	$ 1.21
Weighted average common shares outstanding:
Basic (in shares)	97,428	106,517	98,208	106,161
Diluted (in shares)	98,333	107,927	99,106	107,917
Dividends declared per share:	$ 0.15	$ 0.11	$ 0.30	$ 0.22

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INVENTORIES

6 Months Ended

Jun. 30, 2013

INVENTORIES

INVENTORIES

NOTE 3.  INVENTORIES

The net carrying value of inventories consisted of the following:

	June 30,		December 31,
	2013		2012
	(unaudited)
	(in thousands)
Finished product ready for sale	$	455,539	$	415,096
Work-in-process, bulk product and raw materials	81,314		70,022
Packaging supplies	7,446		6,481
Total	$	544,299	$	491,599

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FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2013

FINANCIAL INSTRUMENTS

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

	June 30, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(unaudited)
	(in thousands)
Cash and cash equivalents	$	64,025	$	64,025	$	158,541	$	158,541
Receivables, net	142,104		142,104		129,641		129,641
Franchise notes receivable, net	8,101		8,101		7,589		7,589
Accounts payable	157,867		157,867		125,165		125,165
Long-term debt (including current portion)	1,096,923		1,091,438		1,098,562		1,101,309

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 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. In March 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 did not own any shares of the Company’s capital stock and OTPP owned 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.  Cadillac Fairview and Ontrea are direct wholly owned subsidiaries of OTPP. For the six months ended June 30, 2012, the Company paid $1.2 million under the lease agreements with Cadillac Fairview, and an immaterial amount for the six months ended June 30, 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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SEGMENTS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 item	Jun. 30, 2012
SEGMENTS
Number of reportable segments			3
Segments
Total revenue	$ 676,276	$ 619,081	$ 1,340,966	$ 1,243,354
Subtotal segment revenues	743,822	689,690	1,473,983	1,380,472
Operating income	123,671	117,060	248,191	229,129
Transaction related costs				(686)
Interest expense, net	11,101	10,495	22,116	20,878
Income before income taxes	112,570	106,565	226,075	208,251
Retail
Segments
Total revenue	502,490	458,632	995,957	928,453
Operating income	100,344	97,617	198,927	190,792
Franchise
Segments
Total revenue	110,560	103,539	218,446	205,024
Operating income	36,650	32,290	75,075	66,719
Manufacturing/Wholesale
Segments
Intersegment revenues	67,546	70,609	133,017	137,118
Third Party	63,226	56,910	126,563	109,877
Subtotal segment revenues	130,772	127,519	259,580	246,995
Operating income	25,507	23,858	48,434	46,695
Elimination of intersegment revenues
Segments
Intersegment revenues	(67,546)	(70,609)	(133,017)	(137,118)
Warehousing and distribution
Segments
Warehousing and distribution costs	(16,869)	(15,625)	(33,224)	(31,420)
Unallocated corporate and other costs:
Segments
Corporate costs	(21,961)	(21,080)	(41,021)	(42,971)
Transaction related costs				(686)
Subtotal unallocated corporate and other costs	$ (38,830)	$ (36,705)	$ (74,245)	$ (75,077)

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NATURE OF BUSINESS (Details) (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended			1 Months Ended					6 Months Ended	0 Months Ended	1 Months Ended
	Jun. 30, 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	Jun. 30, 2013 Class A Common Stock	Oct. 12, 2012 Term Loan Facility	Aug. 31, 2012 Term Loan Facility	Mar. 31, 2011 Term Loan Facility	Mar. 31, 2011 Revolving Credit Facility	Dec. 31, 2012 Maximum Class A Common Stock OTPP	Jun. 30, 2013 Minimum item
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
Amount of shares repurchased									181.3
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 (Tables)

6 Months Ended

Jun. 30, 2013

SEGMENTS

Schedule of key financial information of the segments

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(unaudited)
	(in thousands)
Revenue:
Retail	$	502,490	$	458,632	$	995,957	$	928,453
Franchise	110,560		103,539		218,446		205,024
Manufacturing/Wholesale:
Intersegment revenues	67,546		70,609		133,017		137,118
Third Party	63,226		56,910		126,563		109,877
Subtotal Manufacturing/Wholesale	130,772		127,519		259,580		246,995
Subtotal segment revenues	743,822		689,690		1,473,983		1,380,472
Elimination of intersegment revenues	(67,546)		(70,609)		(133,017)		(137,118)
Total revenue	$	676,276	$	619,081	$	1,340,966	$	1,243,354
Operating income:
Retail	$	100,344	$	97,617	$	198,927	$	190,792
Franchise	36,650		32,290		75,075		66,719
Manufacturing/Wholesale	25,507		23,858		48,434		46,695
Unallocated corporate and other costs:
Warehousing and distribution costs	(16,869)		(15,625)		(33,224)		(31,420)
Corporate costs	(21,961)		(21,080)		(41,021)		(42,971)
Transaction related costs	-		-		-		(686)
Subtotal unallocated corporate and other costs	(38,830)		(36,705)		(74,245)		(75,077)
Total operating income	123,671		117,060		248,191		229,129
Interest expense, net	11,101		10,495		22,116		20,878
Income before income taxes	$	112,570	$	106,565	$	226,075	$	208,251

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FINANCIAL INSTRUMENTS (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Carrying Amount
Actual and estimated fair values of the financial instruments
Cash and cash equivalents	$ 64,025	$ 158,541
Receivables, net	142,104	129,641
Franchise notes receivable, net	8,101	7,589
Accounts payable	157,867	125,165
Long-term debt (including current portion)	1,096,923	1,098,562
Fair Value
Actual and estimated fair values of the financial instruments
Cash and cash equivalents	64,025	158,541
Receivables, net	142,104	129,641
Franchise notes receivable, net	8,101	7,589
Accounts payable	157,867	125,165
Long-term debt (including current portion)	$ 1,091,438	$ 1,101,309

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RELATED PARTY TRANSACTIONS (Details) (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2012 Cadillac Fairview	Jun. 30, 2013 Cadillac Fairview item	Jun. 30, 2013 Ontrea item	Dec. 31, 2012 OTPP Class A Common Stock Maximum	Dec. 31, 2012 Ares
Related party transaction
Number of lease agreements entered into by the company		16	1
Amount paid under lease agreements	$ 1.2
Number of shares of common stock owned by related party				10,000	0

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GOODWILL AND INTANGIBLE ASSETS, NET (Details 2) (USD $) In Thousands, unless otherwise specified			6 Months Ended			6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Franchise stores	Jun. 30, 2013 Retail	Dec. 31, 2012 Retail	Jun. 30, 2013 Retail Franchise stores	Jun. 30, 2013 Franchising	Dec. 31, 2012 Franchising	Jun. 30, 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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STOCK-BASED COMPENSATION PLANS (Tables)

6 Months Ended

Jun. 30, 2013

STOCK-BASED COMPENSATION PLANS

Summary of stock options under all plans

	Total Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2012	3,159,542	$	18.96
Granted	20,808	43.73
Exercised	(600,892)	10.20
Forfeited	(61,241)	26.42
Outstanding at June 30, 2013	2,518,217	$	21.07	5.9	$	58,260
Exercisable at June 30, 2013	892,644	$	15.55	5.5	$	25,587

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% - 40.5%
Discount rate	0.9%

Restricted Stock

Stock-based compensation plans

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

	Restricted Stock	Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2012	123,941	$	24.24
Granted	18,497	44.15
Vested	(12,736)	39.74
Forfeited	(7,553)	23.43
Outstanding at June 30, 2013	122,149	$	25.69

Restricted Stock Units

Stock-based compensation plans

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

	Time Vesting Restricted Stock Units	Weighted Average Grant-Date Fair Value		Performance Vesting Restricted Stock Units	Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2012	171,937	$	36.16	-	$	-
Granted	10,664	42.67		45,327	42.19
Forfeited	(6,907)	38.30		(1,379)	42.19
Outstanding at June 30, 2013	175,694	$	36.47	43,948	$	42.19

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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	130,302			130,528	(226)
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	(58,822)	(58,822)
Repurchase of treasury stock (in shares)							(1,665)
Common stock dividends	(23,409)			(23,409)
Conversions to common stock	47,103		47,100				3
Conversions to common stock (in shares)							2,938
Non-cash stock-based compensation	2,320		2,320
Other	(1,051)			(1,051)
Balance at Jun. 30, 2012	1,074,905	(123,870)	791,268	404,899	2,498		110
Balance (in shares) at Jun. 30, 2012							106,318
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	143,026			144,331	(1,305)
Repurchase of treasury stock	(181,310)	(181,310)
Repurchase of treasury stock (in shares)							(4,180)
Common stock dividends	(29,140)			(29,140)
Conversions to common stock	12,568		12,567				1
Conversions to common stock (in shares)							614
Non-cash stock-based compensation	3,874		3,874
Balance at Jun. 30, 2013	$ 831,057	$ (605,210)	$ 826,535	$ 607,878	$ 1,742		$ 112
Balance (in shares) at Jun. 30, 2013						95,678	95,678

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NATURE OF BUSINESS

6 Months Ended

Jun. 30, 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”). In March 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 June 30, 2013, the Company had completed $181.3 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”). In August 2012, the Credit Agreement was amended to increase the outstanding borrowings by $200.0 million.  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%.

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GOODWILL AND INTANGIBLE ASSETS, NET

6 Months Ended

Jun. 30, 2013

GOODWILL AND INTANGIBLE ASSETS, NET

GOODWILL AND INTANGIBLE ASSETS, NET

NOTE 4. GOODWILL AND INTANGIBLE ASSETS, NET

For the six months ended June 30, 2013 and 2012, the Company acquired 11 and 17 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 six months ended June 30, 2013 and 2012, the total purchase price associated with these acquisitions was $2.0 million and $3.4 million, respectively, of which $1.2 million and $1.6 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 June 30, 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	-		-		-			202			202
Amortization expense	-		-		(3,326		)	(845		)	(4,171		)
Balance at June 30, 2013 (unaudited)	$	500,000	$	220,000	$	128,991		$	8,757		$	857,748

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

	Weighted -	June 30, 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		(6,775		)	24,225		31,000		(6,249		)	24,751
Franchise agreements	25.0	70,000		(17,617		)	52,383		70,000		(16,217		)	53,783
Manufacturing agreements	25.0	70,000		(17,617		)	52,383		70,000		(16,217		)	53,783
Other intangibles	11.4	10,600		(2,757		)	7,843		10,600		(2,151		)	8,449
Franchise rights	3.7	5,335		(4,421		)	914		5,134		(4,183		)	951
Total	24.5	$	906,935	$	(49,187	)	$	857,748	$	906,734	$	(45,017	)	$	861,717

The following table represents future estimated amortization expense of intangible assets with finite lives at June 30, 2013:

	Estimated
	amortization
Years ending December 31,	expense
	(unaudited)
	(in thousands)
2013	$	4,336
2014	8,155
2015	8,003
2016	7,934
2017.	7,885
Thereafter	101,435
Total	$	137,748

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 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 six months ended June 30, 2013, the Company incurred no transaction related costs. For the six months ended June 30, 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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SUBSEQUENT EVENTS (Details) (USD $)	3 Months Ended		6 Months Ended		0 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jul. 18, 2013 Subsequent event Dividend declared Class A Common Stock
Subsequent events
Dividends declared per share: (in dollars per share)	$ 0.15	$ 0.11	$ 0.30	$ 0.22	$ 0.15

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Transaction related costs
Expenses, related to the Offering	$ 0	$ 0.7

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GOODWILL AND INTANGIBLE ASSETS, NET (Details 3) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 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	202
Amortization expense	(4,171)
Balance at the end of the period	137,748
Changes in amount of intangible assets during the period
Total at the beginning of the period	861,717
Acquired franchise stores	202
Amortization expense	(4,171)
Total at the end of the period	857,748
Intangible assets, net
Weighted Average Life	24 years 6 months
Brands	720,000
Accumulated Amortization	(49,187)	(45,017)
Carrying Amount	137,748
Total Cost	906,935	906,734
Total Carrying Amount	857,748
Future estimated amortization expense of other intangible assets, net, with definite lives
2013	4,336
2014	8,155
2015	8,003
2016	7,934
2017	7,885
Thereafter	101,435
Total	137,748
Operating Agreements
Changes in amount of finite lived intangible assets during the period
Balance at the beginning of the period	132,317
Amortization expense	(3,326)
Balance at the end of the period	128,991
Changes in amount of intangible assets during the period
Amortization expense	(3,326)
Intangible assets, net
Carrying Amount	128,991
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	128,991
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	24,225
Intangible assets, net
Weighted Average Life	30 years 2 months 12 days
Cost	31,000	31,000
Accumulated Amortization	(6,775)	(6,249)
Carrying Amount	24,225
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	24,225
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	52,383
Intangible assets, net
Weighted Average Life	25 years
Cost	70,000	70,000
Accumulated Amortization	(17,617)	(16,217)
Carrying Amount	52,383
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	52,383
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	52,383
Intangible assets, net
Weighted Average Life	25 years
Cost	70,000	70,000
Accumulated Amortization	(17,617)	(16,217)
Carrying Amount	52,383
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	52,383
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	202
Amortization expense	(845)
Balance at the end of the period	8,757
Changes in amount of intangible assets during the period
Acquired franchise stores	202
Amortization expense	(845)
Intangible assets, net
Carrying Amount	8,757
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	8,757
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	7,843
Intangible assets, net
Weighted Average Life	11 years 4 months 24 days
Cost	10,600	10,600
Accumulated Amortization	(2,757)	(2,151)
Carrying Amount	7,843
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	7,843
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	914
Intangible assets, net
Weighted Average Life	3 years 8 months 12 days
Cost	5,335	5,134
Accumulated Amortization	(4,421)	(4,183)
Carrying Amount	914
Future estimated amortization expense of other intangible assets, net, with definite lives
Total	914
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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STOCK-BASED COMPENSATION PLANS (Details 2) (USD $)	6 Months Ended
	Jun. 30, 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
Minimum volatility factor percentage of market price	40.10%
Maximum volatility factor percentage of market price	40.50%
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)	18,497
Vested (in shares)	(12,736)
Forfeited (in shares)	(7,553)
Outstanding at the end of the period (in shares)	122,149
Weighted Average Grant-Date Fair Value
Outstanding at the beginning of the period (in dollars per share)	$ 24.24
Granted (in dollars per share)	$ 44.15
Vested (in dollars per share)	$ 39.74
Forfeited (in dollars per share)	$ 23.43
Outstanding at the end of the period (in dollars per share)	$ 25.69
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)	10,664
Vested (in shares)	0
Forfeited (in shares)	(6,907)
Outstanding at the end of the period (in shares)	175,694
Weighted Average Grant-Date Fair Value
Outstanding at the beginning of the period (in dollars per share)	$ 36.16
Granted (in dollars per share)	$ 42.67
Forfeited (in dollars per share)	$ 38.30
Outstanding at the end of the period (in dollars per share)	$ 36.47
Vesting period	3 years
2011 Stock Plan | Performance Vesting Restricted Stock Units
Restricted stock and restricted stock units
Granted (in shares)	45,327
Vested (in shares)	0
Forfeited (in shares)	(1,379)
Outstanding at the end of the period (in shares)	43,948
Weighted Average Grant-Date Fair Value
Granted (in dollars per share)	$ 42.19
Forfeited (in dollars per share)	$ 42.19
Outstanding at the end of the period (in dollars per share)	$ 42.19
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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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	300,000	300,000
Class A Common Stock
Common stock, shares issued	112,339	111,725
Common stock, shares outstanding	95,678	99,244
Common stock, shares held in treasury	16,661	12,481

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2013

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 7.  COMMITMENTS AND CONTINGENCIES

The Company is engaged in various legal actions, claims and proceedings 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.  The Company records accruals for outstanding legal matters when it believes it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, the Company does not establish an accrued liability.  Currently, none of the Company’s accruals for outstanding legal matters are material individually or in the aggregate to the Company’s financial position. However, if the Company ultimately is required to make a payment in connection with an adverse outcome in any of the matters discussed below, it is possible that it could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

The Company’s contingencies are subject to substantial uncertainties, including for each such contingency the following, among other factors: (i) the procedural status of the case; (ii) whether the case has or may be certified as a class action suit; (iii) the outcome of preliminary motions; (iv) the impact of discovery; (v) whether there are significant factual issues to be determined or resolved; (vi) whether the proceedings involve a large number of parties and/or parties and claims in multiple jurisdictions or jurisdictions in which the relevant laws are complex or unclear; (vii) the extent of potential damages, which are often unspecified or indeterminate; and (viii) the status of settlement discussions, if any, and the settlement posture of the parties.  Consequently, except as otherwise noted below with regard to a particular matter, the Company cannot predict with any reasonable certainty the timing or outcome of the legal matters described below, and the Company is unable to estimate a possible loss or range of loss.

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. Consequently, the Company may incur material product liability claims, which could increase its costs and adversely affect its reputation, revenue and operating income.

Litigation

Hydroxycut Claims. In 2009, the FDA issued a warning on several Hydroxycut-branded products manufactured by Iovate Health Sciences U.S.A., Inc. (“Iovate”) 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, including a number of putative class action cases, related to Hydroxycut-branded products in 14 states.  Iovate accepted the Company’s tender request for defense and indemnification under its purchasing agreement in these matters.

As of June 30, 2013, there were 73 pending lawsuits related to Hydroxycut in which the Company has been named, including 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. 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 reached a settlement, which was preliminarily approved by the Court. There are two objectors to the settlement.  The parties’ motion for final approval of the settlement was heard on April 23, 2013. The judge indicated at the hearing that he would grant final approval of the settlement, but ordered the objectors to appear at an evidentiary hearing, which was held on July 16, 2013, to provide evidence of their standing to object to the settlement. The Court has not yet issued its decision with respect to the matters addressed at the July 16th hearing.  The Company is not required to make any payments under the settlement agreement.

In May 2013, the parties to the individual personal injury cases signed a Master Settlement Agreement, under which the Company is not required to make any payments. After the Master Settlement Agreement was signed, a new case was filed against Iovate and several other defendants, including the Company, in Alabama state court. Iovate is working to include this case into the master settlement.  Assuming that this most recently filed case is included in the Master Settlement Agreement, and following final court approval of the Master Settlement Agreement pertaining to the individual personal injury cases and the settlement of the consolidated class action suits, all of the Hydroxycut claims currently pending against the Company will be resolved without any payment by the Company.

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 June 30, 2013, such future purchase commitments consisted of $2.8 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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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Consolidated Statements of Comprehensive Income
Net income	$ 71,688	$ 66,671	$ 144,331	$ 130,528
Other comprehensive loss:
Foreign currency translation adjustments	(708)	(580)	(1,305)	(226)
Other comprehensive loss	(708)	(580)	(1,305)	(226)
Comprehensive income	$ 70,980	$ 66,091	$ 143,026	$ 130,302

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 64,025	$ 158,541
Receivables, net	142,104	129,641
Inventories (Note 3)	544,299	491,599
Prepaids and other current assets	40,989	39,016
Total current assets	791,417	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)	137,748	141,717
Property, plant and equipment, net	199,683	199,487
Other long-term assets	32,787	32,124
Total long-term assets	1,731,242	1,733,243
Total assets	2,522,659	2,552,040
Current liabilities:
Accounts payable	157,867	125,165
Current portion, long-term debt (Note 5)	3,557	3,817
Deferred revenue and other current liabilities	103,346	116,337
Total current liabilities	264,770	245,319
Long-term liabilities:
Long-term debt (Note 5)	1,093,366	1,094,745
Deferred tax liabilities, net	283,886	283,203
Other long-term liabilities	49,580	46,734
Total long-term liabilities	1,426,832	1,424,682
Total liabilities	1,691,602	1,670,001
Common stock, $0.001 par value, 300,000 shares authorized:
Paid-in-capital	826,535	810,094
Retained earnings	607,878	492,687
Treasury stock, at cost	(605,210)	(423,900)
Accumulated other comprehensive income	1,742	3,047
Total stockholders' equity	831,057	882,039
Total liabilities and stockholders' equity	2,522,659	2,552,040
Class A Common Stock
Common stock, $0.001 par value, 300,000 shares authorized:
Common stock	$ 112	$ 111

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INVENTORIES (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
INVENTORIES
Finished product ready for sale	$ 455,539	$ 415,096
Work-in-process, bulk product and raw materials	81,314	70,022
Packaging supplies	7,446	6,481
Total	$ 544,299	$ 491,599

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LONG-TERM DEBT / INTEREST EXPENSE (Tables)

6 Months Ended

Jun. 30, 2013

LONG-TERM DEBT / INTEREST EXPENSE

Schedule of long-term debt

	June 30,			December 31,
	2013			2012
	(unaudited)
	(in thousands)
Senior Credit Facility	$	1,095,366		$	1,096,112
Mortgage	1,554			2,444
Capital leases	3			6
Total debt	1,096,923			1,098,562
Less: current maturities	(3,557		)	(3,817		)
Long-term debt	$	1,093,366		$	1,094,745

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INCOME TAXES (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
INCOME TAXES
Income tax expense	$ 40,882,000	$ 39,894,000	$ 81,744,000	$ 77,723,000
Effective income tax rate (as a percent)			36.20%	37.30%
Unrecognized tax benefits	12,900,000		12,900,000		12,900,000
Unrecognized tax benefits that would affect the effective tax rate	12,900,000		12,900,000
Interest and penalties accrued related to unrecognized tax benefits	$ 5,300,000		$ 5,300,000		$ 5,700,000

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COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Commitments and contingencies
Amount of future purchase commitments	$ 2.8
Accrued contingent liability	0
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 objectors to settlement	2
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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STOCK-BASED COMPENSATION PLANS (Details) (USD $)	6 Months Ended
	Jun. 30, 2013 plan	Jun. 30, 2012
Stock-based compensation plans
Number of stock-based employee compensation plans	2
Non-cash stock-based compensation expense	$ 3,900,000	$ 2,300,000
Total unrecognized compensation cost related to non-vested stock awards	17,300,000
Weighted average period over which compensation cost is expected to be recognized	1 year 10 months 24 days
Stock option
Stock-based compensation plans
Total intrinsic value of awards exercised	18,700,000	78,500,000
Total amount of cash received from the exercise of options	6,300,000	19,500,000
Total tax impact associated with exercise of awards	7,000,000	28,900,000
Tax benefit associated with the exercise of awards recorded to paid-in-capital	6,300,000	27,000,000
Total Options
Outstanding at the beginning of the period (in shares)	3,159,542
Granted (in shares)	20,808
Exercised (in shares)	(600,892)
Forfeited (in shares)	(61,241)
Outstanding at the end of the period (in shares)	2,518,217
Exercisable at the end of the period (in shares)	892,644
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 18.96
Granted (in dollars per share)	$ 43.73
Exercised (in dollars per share)	$ 10.20
Forfeited (in dollars per share)	$ 26.42
Outstanding at the end of the period (in dollars per share)	$ 21.07
Exercisable at the end of the period (in dollars per share)	$ 15.55
Weighted Average Remaining Contractual Term (In Years)
Outstanding at the end of the period	5 years 10 months 24 days
Exercisable at the end of the period	5 years 6 months
Aggregate Intrinsic Value
Outstanding at the end of the period	58,260,000
Exercisable at the end of the period	25,587,000
Weighted-average date fair values of options granted (in dollars per share)	$ 14.01	$ 9.89
Fair value of options vested	$ 2,000,000	$ 2,900,000
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

6 Months Ended

Jun. 30, 2013

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

NOTE 6.  FINANCIAL INSTRUMENTS

At June 30, 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:

	June 30, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(unaudited)
	(in thousands)
Cash and cash equivalents	$	64,025	$	64,025	$	158,541	$	158,541
Receivables, net	142,104		142,104		129,641		129,641
Franchise notes receivable, net	8,101		8,101		7,589		7,589
Accounts payable	157,867		157,867		125,165		125,165
Long-term debt (including current portion)	1,096,923		1,091,438		1,098,562		1,101,309

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GOODWILL AND INTANGIBLE ASSETS, NET (Details) (Franchise stores, USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013 item	Jun. 30, 2012 item
Franchise stores
Acquisitions
Number of franchise stores acquired	11	17
Total purchase prices associated with acquisitions	$ 2.0	$ 3.4
Cash paid	$ 1.2	$ 1.6

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SEGMENTS

6 Months Ended

Jun. 30, 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 June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(unaudited)
	(in thousands)
Revenue:
Retail	$	502,490	$	458,632	$	995,957	$	928,453
Franchise	110,560		103,539		218,446		205,024
Manufacturing/Wholesale:
Intersegment revenues	67,546		70,609		133,017		137,118
Third Party	63,226		56,910		126,563		109,877
Subtotal Manufacturing/Wholesale	130,772		127,519		259,580		246,995
Subtotal segment revenues	743,822		689,690		1,473,983		1,380,472
Elimination of intersegment revenues	(67,546)		(70,609)		(133,017)		(137,118)
Total revenue	$	676,276	$	619,081	$	1,340,966	$	1,243,354
Operating income:
Retail	$	100,344	$	97,617	$	198,927	$	190,792
Franchise	36,650		32,290		75,075		66,719
Manufacturing/Wholesale	25,507		23,858		48,434		46,695
Unallocated corporate and other costs:
Warehousing and distribution costs	(16,869)		(15,625)		(33,224)		(31,420)
Corporate costs	(21,961)		(21,080)		(41,021)		(42,971)
Transaction related costs	-		-		-		(686)
Subtotal unallocated corporate and other costs	(38,830)		(36,705)		(74,245)		(75,077)
Total operating income	123,671		117,060		248,191		229,129
Interest expense, net	11,101		10,495		22,116		20,878
Income before income taxes	$	112,570	$	106,565	$	226,075	$	208,251

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LONG-TERM DEBT / INTEREST EXPENSE

6 Months Ended

Jun. 30, 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:

	June 30,			December 31,
	2013			2012
	(unaudited)
	(in thousands)
Senior Credit Facility	$	1,095,366		$	1,096,112
Mortgage	1,554			2,444
Capital leases	3			6
Total debt	1,096,923			1,098,562
Less: current maturities	(3,557		)	(3,817		)
Long-term debt	$	1,093,366		$	1,094,745

For the six months ended June 30, 2013 and 2012, interest expense was $22.1 million and $20.9 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 June 30, 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 June 30, 2013 and December 31, 2012.

As of June 30, 2013, the Company believes that it is in compliance with all covenants under the Senior Credit Facility.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 144,331	$ 130,528
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	25,131	24,329
Amortization of debt costs	1,258	1,166
Increase in provision for inventory losses	8,990	6,554
Increase in receivables	(13,948)	(15,049)
Increase in inventory	(61,874)	(90,642)
(Increase) decrease in prepaids and other current assets	(1,997)	1,699
Increase in accounts payable	32,449	34,475
(Decrease) increase in deferred revenue and other current liabilities	(13,250)	1,384
Other operating activities	5,742	(1,578)
Net cash provided by operating activities	126,832	92,866
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(21,475)	(20,838)
Other investing activities	(1,194)	(1,895)
Net cash used in investing activities	(22,669)	(22,733)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to shareholders	(29,078)	(23,409)
Payments on long-term debt	(1,893)	(833)
Proceeds from exercised stock options	6,280	19,540
Tax benefit from exercise of stock options	6,970	28,903
Repurchase of treasury stock	(181,310)	(59,960)
Other financing activities		(2,500)
Net cash used in financing activities	(199,031)	(38,259)
Effect of exchange rate on cash and cash equivalents	352	(145)
Net (decrease) increase in cash and cash equivalents	(94,516)	31,729
Beginning balance, cash and cash equivalents	158,541	128,438
Ending balance, cash and cash equivalents	$ 64,025	$ 160,167

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LONG-TERM DEBT / INTEREST EXPENSE (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Long-term Debt
Total Debt	$ 1,096,923,000		$ 1,096,923,000		$ 1,098,562,000
Less: current maturities	(3,557,000)		(3,557,000)		(3,817,000)
Long-term debt	1,093,366,000		1,093,366,000		1,094,745,000
Interest expense, net	11,101,000	10,495,000	22,116,000	20,878,000
Senior credit facility
Long-term Debt
Total Debt	1,095,366,000		1,095,366,000		1,096,112,000
Term Loan Facility
Long-term Debt
Interest expense, net			22,100,000	20,900,000
Interest rate (as a percent)	3.75%		3.75%		3.75%
Revolving Credit Facility
Long-term Debt
Interest rate (as a percent)	3.00%		3.00%		3.00%
Letter of credit
Long-term Debt
Outstanding letters of credit	1,100,000		1,100,000		1,100,000
Mortgage
Long-term Debt
Total Debt	1,554,000		1,554,000		2,444,000
Capital leases
Long-term Debt
Total Debt	$ 3,000		$ 3,000		$ 6,000

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2013

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 12. SUBSEQUENT EVENTS

On July 18, 2013, the board of directors authorized and declared a cash dividend for the third quarter of 2013 of $0.15 per share of Class A common stock, payable on or about September 27, 2013 to stockholders of record as of the close of business on September 13, 2013.

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STOCK-BASED COMPENSATION PLANS

6 Months Ended

Jun. 30, 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 vest 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 $3.9 million and $2.3 million of total non-cash stock-based compensation expense for the six months ended June 30, 2013 and 2012, respectively. At June 30, 2013, there was approximately $17.3 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 1.9 years. All expense for the stock-based compensation plans is recorded to paid-in-capital.

During the six months ended June 30, 2013, the total intrinsic value of awards exercised was $18.7 million and the total amount received by Holdings from the exercise of options was $6.3 million. The total tax impact associated with the exercise of awards for the six months ended June 30, 2013 was a benefit of $7.0 million, of which $6.3 million was recorded to paid-in-capital.

During the six months ended June 30, 2012, the total intrinsic value of awards exercised was $78.5 million, and the total amount received by Holdings from the exercise of options was $19.5 million. The total tax impact associated with the exercise of awards for the six months ended June 30, 2012 was a benefit of $28.9 million, of which $27.0 million was recorded to paid-in-capital.

Stock Options

The following table sets forth a summary of stock options under all plans for the six months ended June 30, 2013:

	Total Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2012	3,159,542	$	18.96
Granted	20,808	43.73
Exercised	(600,892)	10.20
Forfeited	(61,241)	26.42
Outstanding at June 30, 2013	2,518,217	$	21.07	5.9	$	58,260
Exercisable at June 30, 2013	892,644	$	15.55	5.5	$	25,587

The weighted average fair value of options granted during the six months ended June 30, 2013 and 2012 was $14.01 and $9.89, respectively. Fair value of options vested during the six months ended June 30, 2013 and 2012 was $2.0 million and $2.9 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 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 six months ended June 30, 2013 were as follows:

Dividend yield	1.4%
Expected option life	4.8 years
Volatility factor percentage of market price	40.1% - 40.5%
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 six months ended June 30, 2013:

	Restricted Stock	Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2012	123,941	$	24.24
Granted	18,497	44.15
Vested	(12,736)	39.74
Forfeited	(7,553)	23.43
Outstanding at June 30, 2013	122,149	$	25.69

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 six months ended June 30, 2013:

	Time Vesting Restricted Stock Units	Weighted Average Grant-Date Fair Value		Performance Vesting Restricted Stock Units	Weighted Average Grant-Date Fair Value
Outstanding at December 31, 2012	171,937	$	36.16	-	$	-
Granted	10,664	42.67		45,327	42.19
Forfeited	(6,907)	38.30		(1,379)	42.19
Outstanding at June 30, 2013	175,694	$	36.47	43,948	$	42.19

No time vesting or performance vesting shares vested during the six months ended June 30, 2013.

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GOODWILL AND INTANGIBLE ASSETS, NET (Tables)

6 Months Ended

Jun. 30, 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 June 30, 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	-		-		-			202			202
Amortization expense	-		-		(3,326		)	(845		)	(4,171		)
Balance at June 30, 2013 (unaudited)	$	500,000	$	220,000	$	128,991		$	8,757		$	857,748

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

	Weighted -	June 30, 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		(6,775		)	24,225		31,000		(6,249		)	24,751
Franchise agreements	25.0	70,000		(17,617		)	52,383		70,000		(16,217		)	53,783
Manufacturing agreements	25.0	70,000		(17,617		)	52,383		70,000		(16,217		)	53,783
Other intangibles	11.4	10,600		(2,757		)	7,843		10,600		(2,151		)	8,449
Franchise rights	3.7	5,335		(4,421		)	914		5,134		(4,183		)	951
Total	24.5	$	906,935	$	(49,187	)	$	857,748	$	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	$	4,336
2014	8,155
2015	8,003
2016	7,934
2017.	7,885
Thereafter	101,435
Total	$	137,748

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

6 Months Ended

Jun. 30, 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 six months ended June 30, 2013, the Company incurred no transaction related costs. For the six months ended June 30, 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.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 26, 2013
Entity Registrant Name	GNC HOLDINGS, INC.
Entity Central Index Key	0001502034
Document Type	10-Q
Document Period End Date	Jun. 30, 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		95,296,359
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2013

INVENTORIES

Schedule of net carrying value of inventories

	June 30,		December 31,
	2013		2012
	(unaudited)
	(in thousands)
Finished product ready for sale	$	455,539	$	415,096
Work-in-process, bulk product and raw materials	81,314		70,022
Packaging supplies	7,446		6,481
Total	$	544,299	$	491,599